Investors shy away from risk assets amidst inflation and the Israel/Gaza conflict. The US grapples with persistent inflation, while the ECB maintains steady rates in the UK/Europe. In Asia, China confronts deflation risks, and South Africa, despite a positive mid-term budget response, remains vigilant as risks linger.
Global stocks shed over $3 trillion during October. The MSCI World Index lost 3% in October. The US Fed left interest rates unchanged (5.25% – 5.5%) but signaled that rates may still go up in future. At the time of writing, 49% of S&P 500 companies reporting actual results, 78% of S&P 500 companies have reported a positive earnings per share (EPS) surprise and 62% reported a positive revenue surprise.
UK/Europe
UK equities lost 3.7% in pounds as the economy grapples with higher inflation (6.7% in September) despite 14 consecutive interest rate hikes from the Bank of England. In Europe, equities fell 3.6% despite the ECB leaving interest rate unchanged at 4.5%. The war between Israel and Hamas has put a dampener on hopes of a sooner ECB pivot as inflation is now only expected to fall to 2% in Q4 2024.
Asia
In China, equity markets also fell in October by 4.3%. Inflation in September was 0% Y-o-Y, slipping closer to deflation and prompting the government to increase borrowing by 1 trillion renminbi ($ 137 billion) to support the local economy.
South Africa
The JSE/All Share Index lost -3% as all the main sectors retreated – Industrials were down -4.5%. Inflation rose to 5.4% in September, closer to the SARB’s upper target driven by higher food (+8.0%) and petrol prices (+7.6%).
The mid-term budget did not bring any surprises. The message was clear: budget cuts are coming, and condition-free bailouts are a thing of the past. The World Bank has announced it will support South Africa’s transition to using cleaner forms of energy with a $1 billion loan.
AngloGold Ashanti paid SARS a total of R4.5 billion in taxes as part of the transaction to move its corporate domicile to the UK and primary listing to the New York Stock Exchange.
Monthly Wrap
DFM Monthly Wrap: October 2023
Key Points
United States
Global stocks shed over $3 trillion during October. The MSCI World Index lost 3% in October. The US Fed left interest rates unchanged (5.25% – 5.5%) but signaled that rates may still go up in future. At the time of writing, 49% of S&P 500 companies reporting actual results, 78% of S&P 500 companies have reported a positive earnings per share (EPS) surprise and 62% reported a positive revenue surprise.
UK/Europe
UK equities lost 3.7% in pounds as the economy grapples with higher inflation (6.7% in September) despite 14 consecutive interest rate hikes from the Bank of England. In Europe, equities fell 3.6% despite the ECB leaving interest rate unchanged at 4.5%. The war between Israel and Hamas has put a dampener on hopes of a sooner ECB pivot as inflation is now only expected to fall to 2% in Q4 2024.
Asia
In China, equity markets also fell in October by 4.3%. Inflation in September was 0% Y-o-Y, slipping closer to deflation and prompting the government to increase borrowing by 1 trillion renminbi ($ 137 billion) to support the local economy.
South Africa
The JSE/All Share Index lost -3% as all the main sectors retreated – Industrials were down -4.5%. Inflation rose to 5.4% in September, closer to the SARB’s upper target driven by higher food (+8.0%) and petrol prices (+7.6%).
The mid-term budget did not bring any surprises. The message was clear: budget cuts are coming, and condition-free bailouts are a thing of the past. The World Bank has announced it will support South Africa’s transition to using cleaner forms of energy with a $1 billion loan.
AngloGold Ashanti paid SARS a total of R4.5 billion in taxes as part of the transaction to move its corporate domicile to the UK and primary listing to the New York Stock Exchange.