On March 7th, Schroders Global Investment released its February economic review and outlook. In the Japanese market, the Japanese stock market quickly rebounded in February, with the TOPIX index showing strong performance once again, recording a total return of 4.9%. Global investors continue to show strong interest in investing in Japan, driving the Japanese market to rebound at a pace far exceeding expectations. Japan's long-term prospects, including inflation recovery and corporate governance reforms, are highly welcomed and recognized by global investors. Market participants have become more relaxed about the possibility of the Bank of Japan canceling its negative interest rate policy in March or April. Despite this, Schroders Global Investment stated that the Bank of Japan will maintain its ultra-loose monetary policy, with inflation gradually increasing as a result of wage growth expected to become the main forecast for the Japanese economy. Macro-economic data released in February was relatively weak, including GDP, consumption, and economic sentiment in the fourth quarter of 2023. However, the market did not show any particular concerns. In February, global stock markets rose, with strong performances in the Chinese stock market and emerging markets. In contrast, bond yields rose (indicating a drop in prices). Investors expect central banks to postpone interest rate cuts. In the US, stocks rose strongly in February, benefiting from positive reactions to the earnings of some companies. This included strong performances from some of the "Big Seven" stocks. Non-essential consumer goods and industrial sectors led the gains, while defensive sectors lagged behind. The Federal Reserve held its policy meeting at the end of January. At the meeting, rates were maintained at 5.25-5.5%, with Fed Chairman Powell indicating it was unlikely for a rate cut in March. Data released in February did not change this outlook. The data generally showed the economy continuing to demonstrate resilience, making the prospect of a short-term interest rate cut more complex. In the Eurozone, stock markets also rose, although gains were lower than in the US markets. The best-performing industries included non-essential consumer goods, industry, and information technology. Real estate and utilities lagged behind, as these industries rebounded towards the end of 2023 in anticipation of interest rate cuts. In non-essential consumer goods, luxury and automotive companies saw gains following strong performances by some major companies in the industry. In the information technology sector, market enthusiasm for the potential development of artificial intelligence continued to drive demand. Strong earnings from some local and global technology companies also supported the industry. In the UK, the stock market remained relatively flat in February. The industrial, financial, and non-essential consumer goods sectors made the largest contributions, while essential consumer goods, real estate, and basic materials were the biggest drags. Official data showed that the UK economy entered a technical recession in the second half of 2023. This was due to the diminishing positive effects of post-pandemic consumer spending increases, as well as factors such as rising inflation and interest rates impeding economic activity. Looking ahead, the Purchasing Managers' Index indicates that economic activity is growing at its fastest pace since the middle of 2023. There are also signs of a robust labor market, with total wages increasing by 5.8% year-over-year for the three months ending in December, slightly higher than the market's expected 5.6%. Surprisingly, UK inflation data showed that overall inflation rate remained unchanged at 4% year-over-year, breaking expectations of a small increase. Similarly, core inflation remained stable at 5.1% year-over-year for the second consecutive month, slightly below the expected 5.2% increase. Despite the improved inflation data, Bank of England Governor Andrew Bailey took a cautious stance on the prospect of interest rate cuts. In a speech at a special committee of the Treasury, he reiterated concerns about inflation temporarily falling below the 2% target and the potential for it to rise again later in 2024. In the Japanese market, stocks quickly rebounded in February, with the TOPIX index showing strong performance once again, recording a total return of 4.9%. The Nikkei 225 index finally surpassed the historical high of 38,915 points set during the bubble economy period in December 1989. The Nikkei index closed at 39,166 points at the end of the month, with a return of 7.9%. The Nikkei index outperformed the TOPIX index, reflecting the dominance of large-cap stocks in the market rebound, while small-cap stocks continued to lag behind. The Japanese market rebounded thanks to strong earnings. Quarterly earnings released from the end of January to February exceeded expectations. This included some automakers, as well as many other large-cap stocks such as financial and trading companies, that outperformed market expectations, boosting investor sentiment. Although tech stocks had slightly weaker quarterly earnings, the expected growth in demand for artificial intelligence led to rising stock prices for semiconductor-related stocks. In February, Asian stock markets (excluding Japan) rose, rebounding from recent lows. During the month, all markets in the MSCI AC Asia (excluding Japan) Index recorded gains, with Thailand and Singapore seeing smaller increases in stock prices in February. South Korea also saw strong gains in February, with official data showing a 4.8% increase in exports compared to the same period last year, fueled by strong semiconductor demand. In February, emerging market stock markets rose in US dollars, outperforming developed market stock markets. Market sentiment continued to be optimistic that the Federal Reserve could cut rates in the middle of the year. In the global bond market, government bond yields rose in February, indicating a drop in prices. The market continued to anticipate central bank rate cuts, but they are not expected to be implemented immediately due to the strong labor market and unexpectedly rising inflation data. Due to relatively positive economic prospects and long-term support from interest rate environments, credit markets outperformed. European investment-grade bonds outperformed US investment-grade bonds, with financial sectors performing well in both markets. High-yield bonds also outperformed, recording positive returns based on relative and total return benchmarks. Investment-grade bonds are the highest-quality bonds rated by credit rating agencies; high-yield bonds are more speculative, with lower credit ratings than investment-grade bonds.