Explore the latest trends and strategic insights in the February 2026 edition of the “Market Compass.”
Markets opened 2026 on uneven footing as the Federal Reserve held rates steady, commodities whipsawed, and AI-driven investment remained the dominant theme. With US equity valuations already embedding a healthy dose of optimism, we expect corporate earnings to do the heavy lifting for returns this year. Selectivity and quality discipline are paramount, while the precious metals correction looks more like a reset than a regime change.
Powell stands firm as Warsh nomination stirs debate – The Federal Reserve left its policy rate unchanged at 3.50% to 3.75%, resisting political pressure for faster easing. The flashpoint came from the White House, where President Donald Trump nominated Kevin Warsh to succeed Jerome Powell when his term ends in May. Warsh, once viewed as a hawk, now advocates lower policy rates but also calls for an aggressive reduction of the Fed’s bond holdings. That mix could drain liquidity and temper rate-cut hopes, turning the nomination into a key test of perceived Fed independence.
Gold and silver caught in the downdraft – After a breathtaking run, precious metals suffered a sharp late-month air pocket. Gold touched a record near USD 5,600 per ounce before falling about 14% in days to roughly USD 4,700, with an intraday low around USD 4,440. Silver slumped from about USD 120 to near USD 80, at times losing more than 30% in its steepest daily decline since the 1980s. Thin liquidity, one-sided positioning, leveraged liquidations, and higher futures margin requirements amplified the move. Despite elevated volatility, dip buyers emerged and year to date gold remains up 12.3% and silver 18.8%. We stay constructive on gold medium term and would not be surprised if, once the post-sell-off rebound has run its course, the precious metal entered a seasonally typical consolidation phase rather than a structural bear market.
Silicon Valley’s scorecard is mixed – Early tech earnings underscore a stricter profitability test for the AI trade. Meta Platforms rose 8.6% in January as operating profit climbed 20% in 2025 to over USD 83bn on 24% advertising revenue growth; investors looked through plans to double AI infrastructure spend to USD 115bn to USD 135bn in 2026. Microsoft shares fell about 10% and are down 11.0% after Azure growth eased marginally to 39% from 40% while capital expenditure surged 66% to USD 37.5bn, stoking questions about AI monetisation despite a USD 625bn backlog that includes OpenAI-related demand. Tesla faces margin pressure and tougher Asian competition, redirecting investment toward its Optimus robots, while Apple’s China momentum strengthened on iPhone 17 upgrades and a high-margin services tailwind.
AI narrative endures while software moats are reassessed – We see no signs of an abrupt end to AI enthusiasm, but dispersion is widening. Parts of semiconductors and infrastructure are clear beneficiaries of expanding AI budgets, while software is undergoing a structural re-rating. AI is increasingly challenging once-formidable competitive moats via lower switching costs, faster substitution, and new competitive dynamics. Expect elevated volatility until a new balance between growth, pricing power, and sustainable monetisation is established. Nvidia’s results on 25 February 2026 will be a crucial barometer for demand, guidance, and supply chains across the AI ecosystem.
Gold miners step into the spotlight – From mid-February, sector earnings should draw investor focus. The average gold price in Q4 2025 was about USD 4,150 per ounce, roughly 55% higher than in Q4 2024, a powerful lever for margins. We see a constructive setup for quality operators as cost discipline meets cyclical uplift.
Bonds downgraded and our tactical stance – We have downgraded bonds from overweight to neutral. While income remains appealing, a significant portion of easing is priced, and inflation risks plus a potential yield-curve steepening could raise long-end volatility. We remain quality-focused in investment grade and only selectively exposed to high yield. Tactical positioning: Cash 2/5; Fixed Income 3/5 (Downgrade); Equities 3/5; Alt. Investments 3/5. For underexposed investors, we favor gradually building gold positions, with a clear preference for bullion and gold mining equities; silver is a higher-beta satellite.
Regional playbook and a services signal – The United States remains our preferred market. In Asia we see opportunities in Japan and Vietnam and are very selective in China, while Europe remains a show-me story. Outside markets, Germany’s Bundesliga posted record revenue of EUR 6.3bn for the 2024/25 season, up just over 8% year on year, underscoring the relative resilience of services even as industry lags.
Ready to dive in? Download the full PDF of our February 2026 Market Compass for forward-looking guidance on navigating today’s markets. Do not hesitate to contact us with any questions about the topics discussed. We are happy to assist you with our expertise.
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