Global equities delivered a constructive month in October, buoyed by earnings resilience and improving liquidity conditions. The bounce masked material internal dispersion, however, both across geographies and sectors. Investors continued to reward long-duration growth, high-quality balance sheets, and sectors tied to structural themes such as AI and automation, while penalising cyclicals exposed to softening global trade, tariffs, and margin pressures.

United States — Still the Global Anchor, But Increasingly Top-Heavy

The U.S. remained the dominant driver of global equity performance:

S&P 500: +2.3%

Dow Jones: +2.5%

Nasdaq: +4.8% (seventh consecutive monthly gain)

Earnings revisions in the U.S. painted a mixed picture: upgrades continued for technology, industrial automation, and AI-linked beneficiaries, while energy, autos, and materials saw downward revisions as input costs and slowing demand weighed on margins. Importantly, U.S. profit leadership is becoming even more concentrated: mega-cap names accounted for most of the index-level earnings growth, underscoring the fragility of breadth.

Valuations remain stretched, with the S&P 500 trading around 22.5x forward earnings—a level that embeds optimistic assumptions around disinflation and economic resilience. Meanwhile, the Fed’s 25 bps cut provided some relief but reinforced a “slow and shallow” easing cycle. Powell’s messaging emphasised caution, curbing expectations of aggressive rate cuts and anchoring bond yields at still elevated levels.

Despite the robust performance, the U.S. equity risk premium remains near decade lows, requiring investors to be increasingly selective in their U.S. exposure.

Europe — Stabilising, but Fundamentally Divergent

European equities were steady, with performance varying by country and sector:

CAC 40: +2.96%

DAX: +0.3%

Eurozone inflation: 2.1% YoY

Core inflation: 2.4%

Europe benefitted from stabilising inflation prints, marginally improving earnings (mainly in defensives), and a rebound in selected consumer sectors. However, structural challenges persist. Industry output remains subdued, the policy stance remains tight, and fiscal fragmentation still shapes the investment landscape. Autos and chemicals continue to underperform, while global defensives—luxury, healthcare, consumer staples—remain relative outperformers.

Crucially, Europe trades at a significant valuation discount (~30–40%) to the U.S., offering selective opportunities but lacking broad-based catalysts for a re-rating.

United Kingdom — Outperforming Developed Peers

UK equities had one of their strongest months of the year:

FTSE 100: +3.9%, hitting a new record high

Gains were driven by the index’s heavy weighting in energy, mining, and global diversified companies, which benefitted from stabilising commodity prices and a modest improvement in global demand indicators. Domestic consumer-facing sectors lagged, reflecting persistent cost-of-living pressures and weak household confidence.

Headline inflation held at 3.8% YoY, and while core inflation ticked down to 3.5%, services inflation remains sticky—limiting the Bank of England’s flexibility relative to peers.

Asia ex-Japan & Emerging Markets — Selective Bright Spots Amid Divergence

Regional dynamics remained mixed:

Shanghai Composite: +1.9%

Hang Seng: –3.5%

Korea, Taiwan, India: outperformed on technology strength and improving global manufacturing PMIs

EM valuations: ~30% discount vs DM

Confidence in China remains fragile, weighed by lacklustre domestic data and restrained policy action. Conversely, India and Korea benefitted from strong credit growth, robust corporate earnings, and improving semiconductor demand.

EM sentiment was further supported by a softer U.S. dollar and stable commodity prices. However, structural growth divergences make active selection critical.

Japan — A Standout Global Performer

Japan extended its leadership:

Nikkei: +16.6%, breaking new all-time highs

Market enthusiasm was bolstered by political clarity following PM Sanae Takaichi’s appointment, expectations of fiscal support, and continued progress on corporate governance reforms. Rising wages (now broadening into SMEs) and improving industrial output (September +2.2%) reinforced the domestic demand story.

Japan remains one of the few major markets where earnings momentum, valuations, and policy alignment remain simultaneously supportive.

South African Equities

South African equities posted another positive month:

JSE ALSI: +1.2%

FINI-15: +7.7%

Property: +6.3%

Industrials: +1.5%

Resources: –10.5%

The divergence between domestically oriented sectors and resources deepened. Financials benefitted from stable inflation, improved loan growth, and declining impairment charges. Listed property rallied on expectations of lower long-term rates, although fundamentals remain uneven across office, retail, and logistics segments. Industrial performance was mixed, while resource counters were heavily impacted by commodity price volatility and softening Chinese demand.

The market’s internal dispersion underscores the importance of style-aware and sector-aware positioning in South Africa.