February proved to be another eventful month for investors, as escalating trade tensions and geopolitical risks sparked further volatility in markets.
US president Donald Trump pushed ahead with his second term agenda last month, with trade tariffs a key focus of these policy plans. This included imposing tariffs on China, as well as announcing plans for reciprocal tariffs. An on-again, off-again theme over tariffs on Mexico and Canada carried on into March, creating more uncertainty for investors.
There is growing concern that a tariff trade war could stoke already stubborn inflation and be a further drag on economic growth. These fears sparked a sell-off across stock markets globally this week, after Trump declined to rule out the possibility that the US economy could dip into a recession this year, in an interview on Sunday.
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Meanwhile, concerns remained in February around the level of spending on artificial intelligence by major tech companies, in the wake of DeepSeek's release of a lower cost AI model. This continued to weigh on the share price of chipmaker Nvidia (NVDA) going into the release of its highly-anticipated fourth-quarter earnings in late February. The stock tumbled after the company's results failed to meet investors lofty expectations and with the latest sell-off, is down 17% over the past month, with worries over the impact of tariffs on chipmakers adding to nervousness.
The month ended with a fiery exchange between Trump and Ukrainian president Volodymyr Zelensky at a White House meeting to discuss a minerals deal, which was hoped would help guarantee further US support towards ending the Russia-Ukraine war. This escalation in geopolitical tensions saw European countries pledge to boost defence spending, on expectations that they could end up shouldering more of the responsibility for Europe's security.
Against this backdrop of heightened economic and geopolitical uncertainty, here's which stocks investors favoured in February.
Stocks in the defence stocks sector surged last month, as investors expected government across Europe to ramp up spending in this space.
Even before Trump and Zelensky's clash at the White House, comments from officials at the Munich Security Conference in mid-February, added to expectations of higher defence spending in Europe.
In terms of which stocks in the sector proved most popular last month, Rolls-Royce Holdings (RR.L) feature on both Interactive Investor's and Hargreaves Lansdown's (HL) (HL.L) top stocks lists.
Shares in Rolls-Royce (RR.L) soared recently after the company reinstated its dividend and announced a £1bn ($1.28bn) share buyback alongside its full-year results, helping to propel the stock to an all-time high.
BAE Systems (BA.L) featured on Interactive Investor's and AJ Bell's (AJB.L) lists last month. In its recent full-year results, BAE (BA.L) reported a 14% increase in sales in 2024 to £28.3bn, as well as a 14% rise in underlying earnings before interest and tax to £3.02bn. In addition, BAE (BA.L) reported a record backlog of orders of £77.8bn, which was up 11% on the previous year.
Richard Hunter, head of markets at Interactive Investor, said: "It is an unfortunate sign of the times that defence stocks are squarely back in fashion, as governments around the world look to protect their interests and lands from growing geopolitical tensions."
He said that Rolls-Royce (RR.L) had been a mainstay of Interactive Investor's list for some time now, while BAE Systems (BA.L) was a new entrant.
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"During the month, both shares continued to fly following strong results, and in the early days of March a further fire was lit under those shares as an extraordinary public spat between the US and Ukraine presidents heightened fears of increasing tensions," he said.
On the US market, data analytics software maker Palantir (PLTR) continued to prove popular with investors, featuring on Interactive Investor and Robinhood's (HOOD) lists. The stock has seen a pullback recently, after the Trump administration announced plans to reduce defence spending, given the sector forms a key part of the company's business.
However, Wedbush Securities said in a note last week that Palantir "is so well positioned for this new disciplined spending environment at the Pentagon" and said the recent sell-off in stock sell-off represents an "opportunity", reiterating an "outperform" rating on the stock.
The Magnificent 7 were at the centre of a sell-off in US stocks on Monday, as fears of an economic downturn gripped markets.
Electric vehicle maker Tesla (TSLA) and chipmaker Nvidia (NVDA) were the biggest fallers in the Mag 7, declining 15% and 5% respectively. However, both were back in the green in on Tuesday, with Nvidia edging up 3% and Tesla gaining 4.5%.
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Indeed, UK investors appear to have taken the sharp falls in Nvidia (NVDA) stock in February as an opportunity to buy the chipmaker, with it featuring both on Interactive Investor and Robinhood's (HOOD) lists.
In its fourth quarter earnings, released in late February, Nvidia (NVDA) delivered revenue of $39.3bn (£30.4bn), beating estimates of £38.2bn. Earnings per share of $0.89 were also ahead of forecasts of $0.84. In addition, the company said it expected to generate revenue of $43bn for the first quarter, better than the $42.3bn expected.
However, Nvidia (NVDA) guided to gross profit margins of 70.6% to 71% in the first quarter, which would be down on the 73% it reported in the fourth quarter.
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Electric vehicle maker Tesla (TSLA) also feature on their lists, despite also seeing heavy falls in its share price, amid backlash against CEO Elon Musk.
Tesla's latest results disappointed against expectations. Tesla posted revenue of $25.7bn for the fourth quarter, which was well below the $27.2bn expected by analysts, as well as being up just 2% on the same period in the previous year. Adjusted earnings per share of $0.73, also came in below expectations of $0.75.
Server maker Super Micro Computer (SMCI) appeared on Robinhood (HOOD) and AJ Bell's (AJB.L) popular stock lists last month.
The stock rallied a couple of weeks ago after the company met a Nasdaq deadline to to submit delayed regulatory filings in order to avoid delisting, though shares have since declined.
Cryptocurrencies have seen plenty of volatility over the past month, with the likes of bitcoin (BTC-USD) rising following Trump's return to office, with expectations of more supportive policies for the digital tokens.
To gain exposure to bitcoin through stocks, investors continued to buy into software business MicroStrategy (MSTR) — which recently rebranded as Strategy — given that it has become one of the world's largest corporate holders of the digital token.
"Donald Trump’s teasing and then confirmation of a strategic reserve of cryptocurrencies in the US got people fired up about bitcoin," said Dan Coatsworth, investment analyst at AJ Bell. "While investors cannot hold the crypto directly in an ISA, they can buy shares in [Strategy] and hold them in the tax wrapper. Strategy has become a proxy for the bitcoin price due to its approximate $23bn investment in the asset, equal to more than a third of the company’s entire market value."
The company featured on the top stocks lists of Interactive Investor, Robinhood (HOOD) and AJ Bell last month. Cryptocurrency exchange platform Coinbase (COIN) also featured on Robinhood's (HOOD) list.
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Miners were also trending with UK investors last month, with UK-listed firm Glencore (GLEN.L) featured on Interactive Investor and AJ Bell's (AJB.L) lists.
Shares in Glencore (GLEN.L) fell last month after the miner missed full-year estimates, with lower thermal coal prices weighing on performance. The company posted a 16% fall in underlying cash profit to $14.4bn, versus expectations of $14.6bn. Gary Neagle, CEO of Glencore (GLEN.L), also suggested that the company was looking at moving its primary listing off of the London market.
In a note released on 28 February, after the release of Glencore's (GLEN.L) results, Deutsche Bank (DBK.DE) analyst Liam Fitzpatrick reiterated a "buy" rating on the stock.
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He said: "We see deep value at current levels, but what could drive a turnaround in performance? We think a sharp focus on operational performance, working capital levels and shareholder returns would be good starting points to improve confidence, with a possible US listing and M&A representing potential medium term catalysts."
Meanwhile, gold miners also proved popular, as another way for investors to gain exposure to the precious metal, which is typically consider as a hedge for inflation and a safe-haven amid uncertainty. Eurasia Mining (EUA.L) featured on Interactive Investor and Hargreaves Lansdown's (HL.L) lists. Greatland Gold (GGP.L) also appeared on HL's popular stocks rundown.
Engineering firm John Wood Group (WG.L) entered Interactive Investor's list in February, as well as appearing on HL (HL.L) and AJ Bell's (AJB.L) rundowns.
Keith Bowman, equity analyst at Interactive Investor, said: "Hoped-for bargain hunting propelled energy sector focused engineer John Wood Group (WG.L) to the top of the [Interactive Investor] most bought list in February.
"A trading update saw Wood offering some reassurance regarding an ongoing audit review of its accounts by Deloitte but also detailing outlook forecasts below its own prior November estimates," he said. "A fresh approach from Dubai-based Sidara about a possible takeover offer added to investor interest."
Finding value opportunities amid volatility appears to have been a common theme across different sectors last month, with investors snapping up a number companies as their share prices fell. While tapping into the emerging theme of defence was also in focus for investors.
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