This month’s market commentary looks back at October and more recent events that have transpired along with some of the key considerations.
Election jitters add to uncertainty in US equities
US Equities had seemingly moved to discount a Democratic win in the November election, but repeated threats from President Trump to challenge any result that did not favour him, sent ripples around the markets, with fears that the election on 3rd November, might not be fully resolved any time soon. The roll-over in technology shares continued as investors took profits from the parts of the market that have seen the biggest gains this year. In fact, the election was decided within a few days, resulting in a sharp bounce in US equities on 9th November.
Covid-19 second wave hits Europe
Once again, the UK and EU markets performed poorly, as Covid-19 case numbers began to increase rapidly, and lockdowns were introduced across several cities and regions, culminating in whole countries heading into lockdown by the end of the month. France and Germany and Belgium were fully locked down as at 31st October, with the UK expected to announce similar measures within a few days.
Merkel sees a Brexit agreement as “overwhelmingly unlikely”
The outlook for the UK and EU economies was further dented in October by an apparent breakdown in talks between the two parties over a post-Brexit trade deal. Chancellor Merkel told UK representatives that a deal now seemed ‘overwhelmingly unlikely’, whilst the British delegation returned to London and the Prime Minister announced that British businesses should now prepare for an exit on WTO terms.
Asian markets buoyed on Covid and US election
The best equity performance in October came from the Asia ex Japan region, where the two-fold benefits of a more benign experience with Covid-19, and the prospect of more harmonious trade relations between China and the US, following the election of the democrat, Joe Biden, meant that the region produced the only decent gain to be had across the global equity landscape.
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Mahfooz (Maz) ShamsuddinDirector & Chief Information Officer