October Market Summary: Oktoberfest Ends Abruptly

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After five consecutive months of steady gains, both global stock and bond markets dropped in October, given a mixed third-quarter earnings season, ongoing geopolitical tensions, and concerns that, whichever candidate wins this week’s US election, will pursue debt-based, inflationary policies.   

The world bond benchmark US 10-year yield ended the month at 4.3%, up from 3.7% at the end of September.   

Some disappointing Tech sector results at the end of the month reversed an until-then positive period, as investors question Tech companies’ ability to turn multi-billion Artificial Intelligence (AI) investments into profits. It seems to be a case of 'not there yet'.  

Meanwhile, good economic news came from China, where fiscal and monetary stimulus is beginning to pay off: the country’s October Manufacturing PMI unexpectedly expanded to 50.1, above recessionary territory, after five months of contraction.  

European growth also surprised on the upside, partially spurred by another rate cut. Traditional safe havens, such as gold and the US dollar, gained – the latter, in turn, giving a boost to euro-based investors.