February 2026 Market Comments: Are you Ready?

Market Comments – Are You Ready? Style Rotation, Rising Oil Prices and Geopolitical Risk Shake Global Markets

“Are you ready” – Billy Ocean, 1980.

Does Billy Ocean’s beat capture today’s market shifts? In turn, are you ready (or were you ready?) for recent weeks’ sharp shift in the global market outlook, with investors facing strong style rotation, rising oil prices, improving market breadth and, among other things, renewed concerns in private debt, followed at the very end of the month by a sudden escalation in geopolitical risk.

If the Dow Jones more or less flatlined during the month, helped by Energy and Cyclicals, significant damage occurred in software stocks on the back of AI-led disruption threats. Salesforce.com, the poster child of the unstoppable rise of SaaS in the corporate world, lost more than 8% in February, down 26% year to date, and this is not an isolated example. Microsoft, one of the world’s largest company, was down 8.7% in February and is down more than 18% year to date.

Few investors could say they were fully prepared for such a seismic market rotation: software stocks were extremely popular among investors because of their low capital intensity and recurring revenues attributes, and not only in public markets, as private equity as well as private debt also had elevated exposure to software companies. To wit, Blue Owl Capital had to halt redemptions in one of its popular fund investing in private debt; rising defaults and software exposure sparked broader contagion concerns in private credit markets.

The geopolitical bass line also intensified. Markets had some level of preparedness for a deteriorating situation in the Middle East, but clearly not for what happened on February 28, which led to a sudden increase in geopolitical risk premium and renewed volatility across global markets.

In a nutshell: growth vs value rotation, higher oil prices, and a rising risk premium — in essence, a challenge to many of the winning trades of the past few years, and a reminder that markets can quickly move into a more defensive, risk-off environment.

The MSCI World Index added 0.6% in February, very much helped by non-US markets: the S&P 500 lost 0.9% but the Stoxx 600 Europe, Topix Japan and MSCI Emerging Markets respectively rose 3.7%, 10.4% and 5.4%. Value stocks increased its advance versus Growth (+2.8% vs -1.7%) confirming the ongoing style rotation in global equity markets.

Government bonds thrived on the back of safe haven status, while credit markets suffered from the risk-off move and lost 0.2%. When geopolitical tensions rise in the Middle East, oil prices tend to move higher, and when risk-off sentiment dominates, gold prices usually follow. Oil gained 2.8% during the month, while gold rose 7.9%. Bitcoin was among the main casualties of the changing market environment, falling 18.6% in February alone and 27.4% year to date.

Overall, the combination of market rotation, higher oil prices, rising geopolitical tensions and stress in private debt markets suggests that the current investment outlook may be less supportive for the dominant trades of recent years, and that investors should be prepared for a more volatile and selective market environment.

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