Overview
In October a majority of global equity markets experienced a decline during the month, due to persistent economic concerns among investors.
Japanese equities however rose after three consecutive months of decline. This was supported by a Yen that weakened against the U.S. dollar and a robust U.S. economy.
Fixed Income
The U.S. Treasury yield rose as investors continued to be wary of inflationary pressures and uncertain about the pace of future interest rate cuts
Uncertainty regarding U.S. debt and the forthcoming U.S. election also added to bond market volatility
Canada
Canadian equities fell during the month
BoC reduced its interest rate by a larger-than-usual 50 bps (0.5%), bringing their key interest rate down to 3.75% from 4.25%
This confirmed that Canada has returned to an era of low inflation
Energy, health care and materials sectors were the main reason for the gains
Real estate, communication services and consumer staples recorded notable losses
Canada's annual inflation rate slowed more than expected September, to 1.6^ from 2% in August
Canada's GDP was estimated to have grown by 0.3% in September, following flat growth in August
U.S.
U.S. equities declined in October
The U.S. stock market ended the month cautiously as investors dealt with a slew of economic data and earnings reports. The upcoming U.S. election and the potential effects of policy changes on inflation and interest rates added to overall uncertainty.
S&P500 Index had its first monthly loss in six months
This was due to investors scaling back their expectations of interest rate cuts along with uncertainty regarding policies in the U.S. election
Employment data in September was stronger than anticipated and unemployment fell to 4.1%
Inflation was slightly higher than expected at 2.4% year-on-year through September
GDP grew at a healthy annual rate of 2.8% in the third quarter
All sectors declined apart from financials, communication services and energy
Global
European stocks ended lower, pressured by ongoing Middle East tensions, weaker earnings and scaled-back expectations for rate cuts from the European Central Bank (ECB)
Chinese and Hong Kong markets gave up a portion of the gains made in the previous month, on concerns about the effectiveness of the stimulus China announced in September.
Leading the declines was materials, consumer staples and heal care
Financials and communication services outperformed the other sectors
European equities fell on concerns about a subdued global outlook
As expected, the ECB lowered its three key interest rates by 25 bps
This signals a weakening economic momentum in Europe
Annual inflation in the Eurozone had accelerated above expectations in October, to 2%
Stimulus measured launched in China in September led to a short-lived boost for Chinese equities
China's Caixin manufacturing PMI was above 50, upheld primarily by improvements in both production and new orders
Japanese equities rose in October
CPI in Japan, which excludes fresh food but includes fuel costs, rose by 2.4% year-on-year in September
Overall inflation rate fell to 2.5% in September from 3% in August
Article provided by Fidelity Investments and iA Private Wealth
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