Global equity markets ended the week of February 16–20, 2026 with renewed momentum as risk appetite improved and volatility eased materially. Gains were broadly distributed across major U.S. and European benchmarks, while select Asian markets delivered outsized moves. The sharp decline in volatility signals a notable shift in short-term sentiment compared with prior weeks.

U.S. Markets Rebound as Risk Appetite Broadens

U.S. equities posted a constructive weekly performance, reflecting improved investor confidence. The S&P 500 advanced +1.12%, supported by balanced sector participation, while the Nasdaq Composite rose +1.28%, suggesting renewed demand for growth-oriented stocks. Small-cap equities outperformed large caps, with the Russell 2000 gaining +1.83%, often interpreted as a sign of expanding risk tolerance. The Dow Jones Industrial Average increased +0.35%, indicating steadier gains among more established industrial names.

Perhaps most significant was the drop in the CBOE Volatility Index, which fell -7.33% over the five-day period. The move lower in the VIX points to reduced hedging demand and improving short-term confidence in market stability. Meanwhile, the U.S. Dollar Index edged up +0.94%, suggesting that currency markets remained stable and that capital flows did not reflect heightened defensive positioning.

European Benchmarks Show Coordinated Strength

European markets delivered synchronized gains during the week. France’s CAC 40 rose +2.45%, the strongest among major Western European indices. The UK’s FTSE 100 climbed +2.30%, benefiting from broad-based participation, while Germany’s DAX added +1.39%. The MSCI Europe Index increased +1.30%, underscoring that the rally was not isolated to one or two national markets.

The coordinated performance across the region may reflect improved earnings visibility and relative valuation stability compared with other global markets. Europe’s advance also suggests that investors are increasingly comfortable reallocating capital internationally as volatility subsides.

Asia Diverges, Israel Extends Momentum

Asia-Pacific markets presented a mixed but dynamic picture. South Korea’s KOSPI surged +8.48%, marking one of the strongest weekly performances among major global indices and highlighting concentrated investor interest. China’s Shanghai Composite edged higher +0.41%, while Japan’s Nikkei 225 was essentially flat at +0.03%, reflecting a pause after prior strength. In contrast, Hong Kong’s Hang Seng Index declined -2.83%, underscoring continued regional differentiation.

Israeli equities maintained upward momentum. The TA-35 rose +1.48%, and the broader TA-125 gained +1.39%. The steady gains suggest sustained domestic participation and relative insulation from some of the volatility that characterized other regions in recent weeks.

Looking ahead, investors will closely monitor macroeconomic releases, inflation signals, and central bank communication to determine whether the decline in volatility can be sustained. The combination of equity gains and a sharp drop in the VIX indicates improving sentiment, but durability will depend on consistent economic data and stable global conditions. If volatility remains contained, cross-regional capital allocation and sector rotation may continue to shape performance in the weeks ahead.