A few markets recorded new record highs in October 2024, yet most ended the month in the red. Renewed geopolitical risk, concerns about the Federal Reserve (Fed) not being as aggressive in its rate cutting cycle, as well as the looming US elections all contributed to the October market turbulence.
All three major US indices ended October weaker despite hitting new record highs during the month. The Dow ended the month lower by 1.3%, the S&P 500 was down by 1.0% and the Nasdaq, which hit an all-time high on the 25th of October, ended the month lower by 0.5%. The latter was due to a sell-off on October 31st on the back of poor quarterly reports form tech heavyweights Apple, Meta and Microsoft.
On the economics front, US September inflation data printed slightly higher than market expectations, with CPI printing at 2.4% YoY compared to the August figure of 2.5% YoY, while US Core CPI, which excludes energy and food, printed at 3.3% YoY vs August’s 3.2% YoY figure.
Europe initially took heart from the European Central Bank’s (ECB) third 25 bps cut this year, but as markets and sentiment moved, these ended the month lower, with the Dax down by 1.3% and the CAC weaker by 3.7%. On the economics front, inflation in the eurozone for September fell below the ECB’s 2% target, printing at 1.8% YoY, while core inflation (ex-food and energy) printed at 2.7%, softer than the 2.8% print of August.
In the UK, the FTSE ended October lower by 1.5%, with UK September inflation also dropping sharply to 1.7% YoY, vs the 2.2% YoY August print, and below the BoE’s 2% target rate. The UK’s new Chancellor of the Exchequer, Rachel Reeves, announced the biggest tax increases in the UK in almost 30 years, which is inflationary, and as a result the expectation is for the BoE to hold rates steady at its November meeting.
Asian markets had a mixed October, with markets in China running out of steam post the stimulus-induced run, as the Hang Seng ended the month lower by 3.9% and the Shanghai Composite weaker by 1.7%. Chinese GDP for quarter three came in at 4.6% YoY, above the 4.5% YoY market consensus forecast, but below the 4.7% YoY print of the second quarter.
Japan’s Nikkei ended October higher by 3.1%, with headline CPI for September falling to 2.5% versus the August figure of 3.0%, with core CPI printing at 2.4% YoY vs the August print of 2.8%. Unlike its European and US counterparts, the BoJ kept its benchmark rates at around 0.25%, with incoming Prime Minister, Shigeru Ishiba, stating the country was not yet ready for another rate hike.