Global markets closed the week of February 23–27, 2026 with a more cautious tone, as U.S. equities pulled back and volatility increased. While parts of Europe and Asia delivered gains, the divergence in regional performance highlights shifting investor sentiment and uneven capital flows across developed and emerging markets.

U.S. Equities Retreat as Volatility Rebounds

U.S. benchmarks ended the week in negative territory. The S&P 500 declined -0.44%, while the Nasdaq Composite fell -0.95%, reflecting pressure on growth-oriented sectors. Small-cap stocks underperformed significantly, with the Russell 2000 dropping -1.18%, suggesting that risk appetite weakened during the period. The pullback in smaller companies often signals heightened sensitivity to domestic economic conditions and liquidity dynamics.

The CBOE Volatility Index (VIX) rose +4.03% over the five-day stretch, reinforcing the shift toward defensive positioning. Although the U.S. Dollar Index was largely stable, slipping -0.06%, the increase in volatility indicates rising short-term uncertainty. Together, these movements suggest investors were recalibrating expectations amid evolving macroeconomic signals.

Europe Demonstrates Relative Stability

In contrast to the U.S., European equities showed relative resilience. The FTSE 100 advanced +2.09%, supported by broad sector participation. The MSCI Europe Index gained +1.11%, while France’s CAC 40 rose +0.77%. Germany’s DAX posted a marginal increase of +0.09%, reflecting stability rather than strong acceleration.

The coordinated positive performance across key European benchmarks suggests that investors may be viewing the region as comparatively insulated from short-term U.S. market volatility. Steady gains also indicate continued institutional participation and cross-border capital allocation into European equities during the week.

Asia Mixed but Constructive; Israel Pulls Back

Asia-Pacific markets presented a dynamic performance profile. Japan’s Nikkei 225 climbed +3.56%, extending its upward momentum. South Korea’s KOSPI surged +6.81%, marking one of the strongest weekly advances among major global indices. Hong Kong’s Hang Seng Index added +0.82%, and China’s Shanghai Composite rose +0.70%, indicating measured optimism in the region.

In Israel, however, equities moved lower. The TA-35 declined -2.45%, and the broader TA-125 fell -3.04%. The sharper pullback in the broader index suggests wider market participation in the decline, potentially reflecting localized factors or sector-specific pressures.

Looking ahead, investors will closely monitor inflation data, central bank guidance, and global growth indicators to assess whether the uptick in volatility is temporary or indicative of a broader risk recalibration. The divergence between U.S. weakness and European and Asian resilience underscores the importance of regional differentiation. Sustained volatility, if it persists, could continue to shape cross-market capital flows and influence short-term equity performance worldwide.