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Whilst this article focuses in the main on October 2023 market news, there are references to events and market performance from previous months.
As inflation remains stubborn, and interest rates may have to remain higher for longer, recessionary concerns have grown around the world.
Read on to discover what happened on the global stock market in October, and some of the factors that may have affected your investment portfolio.
When reviewing short-term market movements, remember to focus on your long-term investment goals.
US inflation remained steady over the 12 months to September, at 3.7%; this was slightly above economists’ prediction of 3.6%1.
The percentage of US adults in their prime working years participating in the labour force is now at 83.5%, its highest level in 20 years2.
Over the last two decades, the US economy has grown at roughly double the pace of Europe and the UK; this looks set to continue in 20243. The IMF has predicted that the US economy will expand by 1.5% in 2024, compared to forecasts of 1.2% for the eurozone and 0.6% for the UK3.
While this is partly due to soaring costs of energy in Europe after Russia’s invasion of Ukraine, more structural reasons – like the US’s booming technology sector – have also helped to maintain growth3.
On the stock market, the S&P 500 fell by 2.1% in October, bringing its year-to-date (YTD) returns to 10.7%. The Dow Jones Industrial Index fell by 1.3% in October, taking its YTD returns to 1.4% and the Nasdaq Composite returned -2.8% in October, rising by 23.6% for the YTD4.
After a slump in July, official data shows the UK economy grew by 0.2% in August, with the Office for National Statistics (ONS) reporting that the service sector mostly drove this growth5.
Despite this positive news, concerns remain that the UK is heading into recession. Official figures indicated that the unemployment rate rose to 4.2% between June and August, up from 4% in the March to May quarter6.
In addition, UK business activity shrank for the third consecutive month in October. The S&P Global/Cips Flash UK composite purchasing managers’ output index marginally increased to 48.6 in October from 48.5 the previous month7.
Any reading below 50 equates to a contraction, indicating that a majority of businesses continued to report a drop in their output for the third consecutive month7.
Inflation remains stubborn, as the headline rate was unchanged at 6.7% in the year to September8. Rising fuel costs offset the first monthly fall in food prices for two years to maintain pressure on households8.
The FTSE 100 experienced its worst monthly returns since May, falling by 3.8%, although the FTSE 250 fared worse, falling 6.5% in October, its worst monthly performance in over a year9.
Fears of a recession also persist in the eurozone, after the economy contracted by 0.1% in Q310.
S&P Global indicated that eurozone business activity declined for the fifth consecutive month and, excluding the months affected by pandemic lockdowns, it was the heaviest fall for a decade11.
In more positive news, annual inflation in the eurozone fell to a two-year low of 2.9% in the year to October12. This comes after the European Central Bank decided to pause its campaign of interest rate hikes for the first time in 15 months, keeping its benchmark rate at 4%13.
The MSCI Europe ex-UK index – an index covering 344 constituents in 14 developed markets across Europe – fell by 3.3% in October, and has returned 6.3% YTD14.
China’s third-quarter Gross Domestic Product figures were higher than expected at 4.9%, suggesting that the economy could meet or exceed its 5% target for 202315. Monthly data also exceeded expectations, as industrial production grew by 4.5% and retail sales rose by 5.5% in September15.
The Chinese property sector continues to struggle though, as property investment fell by 9.1% in the January-to-September period compared to the same period in 202215.
In Japan, yen weakness persisted despite the Bank of Japan’s intervention, dropping to a 15-year low against the euro and a fresh one-year low against the dollar on the final day of the month16.
On the stock markets, the MSCI Asia ex-Japan fell by 3.9%, while the Japan TOPIX dropped by 3% for the month14.
What this means for you
When global events create uncertainty on the stock markets, it can feel as though you need to respond with action. It’s often uncomfortable to watch volatility affect your portfolio.
But one of the key principles of investing that we advocate here at Succession Wealth is to take a bespoke approach to your wealth. This means that there’s no one-size-fits-all approach to investing, and as such, it’s your personal circumstances and goals that influence the balance of assets in your portfolio.
So, when those around you rush to change their portfolio in an attempt to mitigate the effects of uncertainty, take comfort from the fact that your goals haven’t changed. When you focus on this, rather than short-term changes on the stock market, you can feel confident that you’re doing everything possible to achieve the lifestyle you dream of.
Succession Wealth is a trading style of Succession Wealth Management Limited, which is authorised and regulated by the Financial Conduct Authority. Financial Services Register number 588378.
Succession Wealth Management Ltd is registered in England at The Apex, Brest Road, Derriford Business Park, Derriford, Plymouth PL6 5FL: Registered Number 07882611.
Please note: This guide is for general information only and does not constitute advice. The information is aimed at retail clients only.
The content of this guide was accurate at the time of writing. While information is considered to be true and correct at the date of publication, changes in circumstances, regulation, and legislation after the time of publication may affect the accuracy of the guide.
12.10.2023 US consumer price inflation rose more than expected in September CNN
06.10.2023 The Employment Situation in September The White House
19.10.2023 How is the US economy managing to power ahead of Europe? Financial Times
1.11.2023 October 2023 Review and Outlook Nasdaq
12.10.2023 GDP monthly estimate, UK: August 2023 Office for National Statistics
24.10.2023 Labour market overview, UK: October 2023 Office for National Statistics
24.10.2023 TOP NEWS: UK private sector contracts as continues to skirt recession Morningstar
18.10.2023 UK inflation holds steady at 6.7% in September MoneyWeek
31.10.2023 FTSE 100 ends October on glum note; BP drops on sluggish earnings Reuters
131.10.2023 Eurozone economy shrinks by 0.1%, putting it at brink of recession Guardian
24.10.2023 Rising recession risks as eurozone flash PMI falls in October, price pressures ease further S&P Global
31.10.2023 Euro zone inflation drops to two-year low in October; economy shrinks in third quarter CNBC
26.10.2023 ECB pauses rate hike campaign as recession in Europe looms CNN
1.11.2023 Monthly Market Review J P Morgan
17.10.2023 China’s third-quarter growth exceeds forecast, consumer spending and industrial production offer hope CNBC
31.10.2023 Japan's yen sinks broadly as BOJ policy adjustment seen inadequate Reuters