A look back on markets in October, when risk appetite picked up amid hopes of progress on trade talks.
- October saw gains for global equities amid signs of progress on a US-China trade deal, while central banks remained supportive. Government bonds in general moved lower.
- US equities rallied. US-China trade negotiations saw the two sides agree the outline of a potential mini trade deal. The Federal Reserve lowered interest rates by 25 basis points, its third cut this year.
- Eurozone equities posted gains as some economically-sensitive sectors performed well. GDP growth data for Q3 defied recession worries, with the eurozone economy expanding by 0.2% quarter-on-quarter.
- UK equities underperformed against the backdrop of a very strong rebound in sterling. Sterling bounced back as the prospect of a “no deal” Brexit outcome on 31 October receded.
- The Japanese market recorded a gain of 5.0%. The yen fluctuated against major currencies, reflecting changing views on the likely action of central banks, but ended the month virtually unchanged against the US dollar.
- Emerging market equities recorded a strong return, benefiting from a pick-up in risk appetite. Positive sentiment towards US-China trade talks, further global central bank easing and US dollar weakness all proved supportive.
- In fixed income, government bond yields rose overall (meaning prices fell). Corporate bonds produced positive returns and outperformed government bonds.
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