ICM Monthly Outlook - February 2026

The early momentum in U.S. equities has paused. Year to date, American indices have drifted sideways while Europe, Asia and emerging markets have outperformed. After several years of U.S. leadership, international diversification is regaining attention. In this month’s review, we examine: the compression in the S&P 500 forward earnings multiple; sector rotation driven by valuation re-pricing; investor reassessment of AI substitution risk, particularly in software and wealth management; relative resilience among AI enablers and infrastructure; gold, treasury yields and U.S. dollar trends; the macro outlook for global growth, inflation and central bank policy; and, contagion concerns in private credit markets

While AI continues to present structural growth opportunities, we are now seeing tangible consequences across entire sectors. Valuation dispersion increasingly favours businesses with durable earnings and resilient cash flows. Our broader outlook remains constructive. Global growth is expected to remain steady, inflation continues to trend lower, and policy settings remain broadly supportive.

For a comprehensive analysis of the current market dynamics and future outlook, read the full market review here.