Investors breathed a sigh of relief in October as returns from global share markets were solid in a month which has historically seen some of the most dramatic sell-offs in history, headlined by the market crashes in 1929 and 1987. Sentiment for the month see-sawed as news ebbed and flowed concerning the “twin horseman of the apocalypse” being the US-China trade war and the on-going Brexit saga.
Japan led the way up 5.4% on optimism that its export-oriented economy will benefit from a trade war resolution. The US market was up 2% with the NASDAQ fairing better, advancing 3.7%, as the Federal Reserve cut rates by a further 0.25% as expected late in the month, but signalled it may now pause to assess the impact on the economy of its 0.75% reduction in rates so far this year. Europe advanced 1.9% but across the channel the UK fell 2.2% as PM Boris Johnson failed to get parliamentary approval for his EU negotiated Brexit deal which has now triggering a general election on December 12 as the next step to resolving the impasse.
The Australian market was basically flat despite strong returns from health care stocks CSL, Resmed and Ramsay Health Care offset by weakness in the gold sector which fell sharply for the second consecutive month. Bond markets were generally weaker as yield curves turned positive once again allaying recession fears with US 10-year bonds up 11 basis points to 1.77%, while in Australia 10-year yields rose 9 basis points to 1.11% as expectations of a Melbourne Cup Day rate cut were dashed. The AUD rose 2.2% against a weaker USD to finish at a 3-month high of close to 69 cents.