However, beneath the surface there was significant rotation between sectors, regions and individual companies, driven largely by ongoing developments in artificial intelligence (AI) and the uncertainty of the long-term implications for different business sectors and corporate business models.

This kind of environment – where market leadership shifts time-to-time even as the overall performance of equities remain stable – highlights the value of diversification and a long-term investment approach.

See this dynamic in action in the graph below, showing year to date sector returns in the global equity market:

Interestingly, the technology sector itself was not immune from this speculation. Companies involved in hardware, semiconductors and infrastructure – which underpin AI development – have generally held up better than businesses whose products may be more directly disrupted by new AI tools.

This helps explain why some market moves this month may have felt out of sync with the broader economic headlines. Often, investors weren’t reacting to overall economic growth or company profit reports – they were recalibrating the long-term risks AI poses to jobs and business models.

Why certain regions have performed differently

These sector trends also help explain differences in regional market performance.

For example, the UK equity market has a relatively high exposure to asset heavy sectors such as Energy, Materials and Utilities. These areas have been in favour amid concerns about AI disruption, which has supported UK equity performance relative to broader global indices.

By contrast, the US and global developed market indices have much larger weightings in technology and software businesses, where performance has been more mixed.

This doesn’t mean one region will always outperform another. Instead, it underlines an important point: regional leadership can and does change over time, often for reasons that aren’t immediately obvious from the headlines.

A globally diversified portfolio helps ensure investors aren’t overly reliant on any single market or theme.

Geopolitical developments remained in focus during the month and into March, particularly in the Middle East and around global trade policy.

Predicting short-term market outcomes in such an environment is extremely difficult. For now, the key points are:

• Market impacts are most likely to be felt through energy prices and investor sentiment.
• Volatility may increase as markets respond to new developments.
• The longer-term economic impact will depend on how long tensions persist, and this is highly uncertain. The investment team currently expects the direct military conflict between the US and Iran to be short-lived, i.e., weeks rather than months, limiting the impact on global economy. But there is still the risk that the conflict lengthens and broadens, and it continues to monitor this.

Given that this situation is unfolding, it’s a clear reminder for investors not to get caught up in short-term market swings – keeping a long-term perspective is what ultimately counts.

US tariffs: lots of headlines, limited impact

Investor attention also turned back to tariffs in February, as the US Supreme Court shook up Trump’s trade policy by questioning the legal footing of his tariffs – yet the fallout is far from straightforward.

The US administration has alternative mechanisms available to impose tariffs, and this suggests that the US Supreme Court ruling is likely to have limited overall impact on economic growth, inflation or financial markets. 

As a result, while individual countries’ tariffs may see adjustments over time, the investment team at atomos doesn’t expect trade policy developments to materially alter US tariff levels and the broader investment outlook.

Company earnings are keeping investors grounded, providing a useful anchor amid the noise of geopolitical developments.

With the majority of US companies now having reported results for the final quarter of 2025, earnings growth has been robust. Profits have grown strongly year on year, supported by solid revenue growth and resilient profit margins.

Importantly, earnings strength has broadened beyond the largest US technology companies. Many smaller businesses and companies outside the tech sector are also delivering healthy profit growth, reflecting a resilient economic backdrop.

Within technology, large companies continue to invest heavily in AI infrastructure, pushing spending plans higher again. Investors, meanwhile, are watching closely to see when – and how – their investment turn into real revenues and profits.

Elsewhere, consumer facing companies report that spending remains healthy, though increasingly driven by higher income households.

Overall, these results reinforce an important message: while share prices can move sharply in the short term, it’s the strength of the underlying businesses that drives returns over the medium- and longer-term.

February’s market moves offered a clear example of how markets can look calm on the surface while undergoing significant change underneath.

AI will continue to create both opportunities and challenges, producing winners and losers across and within sectors. Geopolitical risks may generate further bouts of volatility, but do not currently change the investment team’s constructive longer-term investment outlook.

In this environment:

• Diversification remains essential.
• Staying focused on long-term goals helps investors navigate periods of uncertainty.

As ever, maintaining a disciplined, diversified approach remains one of the most effective ways to build wealth over time.

French aviation, defence and space group Safran has been one of the highest-conviction holdings within the portfolios in recent years, delivering consistent and attractive returns. The commercial airline part of the business – where it makes engines, brakes and landing gears – is particularly strong.

This industry faced huge disruption during the Covid pandemic, as flights were grounded and staff furloughed. But since then, there has been a major supply-demand imbalance, with demand for new aircraft significantly outstripping production capacity. Large order backlogs at Airbus and Boeing, labour shortages and production constraints mean this is expected to continue for some time.

The upshot is that existing aircraft are being forced to operate for longer, which means they require more maintenance. Safran is uniquely placed to benefit from this. Limited supply of parts, as well as a need for maintenance shop slots, put its services in high demand and it can charge more.

The firm’s latest results gave us further confidence in this thesis. Its CFM56 engine, which powers roughly 70% of the world’s active narrowbody fleet (single-aisle planes such as the Airbus A320 and the Boeing 737), is expected to remain strongly in demand until the end of the decade. Meanwhile, the newer LEAP engine is now expected to be more profitable and for longer than previously assumed.

As fewer aircraft are retired and competing engines continue to face operational challenges, Safran looks well-placed to sustain revenue growth, expand its profit margins and increase cashflow.

Source: atomos.

Information correct as of 5th March 2026. 

FOR PROFESSIONAL INVESTORS ONLY.

atomos is the trading name of both Atomos Investments Limited (FCA No: 122588, Company No: 2041819) and Atomos Financial Planning Limited (FCA No: 193503, Company No: 3879955), both authorised and regulated by the Financial Conduct Authority and registered in England and Wales. Registered offices: 2nd floor, 5 Hatfields (alto), London, SE1 9PG.

The information and opinion contained in this article should not be treated as a forecast, research or advice to buy or sell any particular investment or to adopt any investment strategy. Any views expressed are based on information received from a variety of sources which we believe to be reliable, but are not guaranteed as to accuracy or completeness by atomos. Any expressions of opinion are subject to change without notice. Past performance is not a reliable indicator of future results. Investing involves risk and the value of investments, and the income from them, may fall as well as rise and is not guaranteed. Investors may not get back the original amount invested.

The companies mentioned are shown for illustrative purposes only, do not constitute investment advice, and are not a recommendation to buy or sell any security.

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