Howard Silverblatt, senior index analyst, S&P Dow Jones Indices, analyses ‘messy’ October’s effect on global markets…
There is no easy way to put it – the market was a mess this month. Concerns over European, Japanese and Chinese growth, lower oil prices reducing income for sovereign nations, and an Ebola scare pushed stocks down in the first part of the month, as several markets went into correction mode (off at least 10% from their high).
The tone changed, however (at least in the US), as positive earnings started to come in, refocusing investor attention on issues at home. Several non-US markets also benefited from their earnings, but it was a US change that helped refocus some of the global attention from “doom and gloom” to “buy and celebrate”. The US Fed ended stimulus as expected, but said it would keep rates low. On the last day of the month the Bank of Japan unexpectedly increased its stimulus, pushing the market up for day, and pulling other markets up with it.
While the month ended with a positive return, 35 of the 46 countries closed lower, as the US pulled global market up.
Emerging markets did better than developed markets for the month of October, as they posted a 1.45% gain with 16 of the 23 markets posting a loss. Greece was the worst-performing country for the month at off 15.06%, as the recurring concerns over its economy and debt returned.
Oil-producing countries declined, as Egypt fell 7.10%, the UAE lost 9.38% and Russia posted a 2.66% decline.
Turkey did the best in October, adding 10.20%, with South Africa up 6.14%. Emerging markets are up 3.79% YTD, with a wide range of returns in that time period, from India’s 34.06% gain to Greece’s 29.51% decline.
Developed markets posted a 0.61% gain for the month, which would have been a 1.82% decrease without the US 2.65% gain. Hong Kong did the best in October at up 5.20%, as it turned its YTD return positive, at up 3.83%. Australia rebounded by 4.63% for the month, as it also turned its return positive, with a 1.19% gain. Norway was the worst-performing country of the developed markets in October, off 9.59%, followed by Portugal, off 8.44%, and Italy, which declined 6.08%. Developed markets are up 2.31% YTD, but excluding the 8.19% gain by the US, the overall increase would be a loss of 4.24%.
