October 2021

• Global markets rebounded strongly in October as corporate earnings remained robust and investors became more comfortable with inflation and central bank tapering expectations.
• Energy prices remained elevated, contributing to ongoing inflation concerns globally.
• U.S. and European equities reached new highs as strong earnings growth supported investor confidence.
• Technology and financial sectors outperformed amid resilient economic activity.
• Emerging markets remained mixed due to Chinese growth concerns and tightening global financial conditions.
• Commodity prices stayed elevated despite volatility in energy and industrial metals markets.

Asia (ex. Japan)

Asian markets outside Japan delivered mixed performance during October as investors balanced strong export demand against ongoing concerns surrounding China’s property sector and regulatory environment. Chinese growth indicators softened further due to property market weakness and energy shortages.

However, Taiwan and South Korea remained relatively resilient due to strong global semiconductor demand and improving corporate earnings within technology sectors.

Europe

European equities advanced strongly during October as corporate earnings exceeded expectations and economic activity remained resilient despite supply chain disruptions and rising energy costs.

Financials, industrials and luxury goods sectors performed particularly well, while the European Central Bank maintained accommodative policies and reiterated that inflation pressures were likely to prove temporary.

United States

U.S. equities reached fresh record highs during October as strong corporate earnings and continued consumer spending supported market optimism. Technology companies delivered particularly strong results despite ongoing supply chain challenges.

The Federal Reserve prepared markets for the beginning of asset purchase tapering while maintaining expectations that interest rates would remain low for some time. Investors remained focused on inflation data and labour market recovery trends.

United Kingdom

UK equities advanced during October as rising commodity prices and strong global earnings supported energy, mining and financial sectors.

However, inflation concerns intensified due to rising energy costs and labour shortages, increasing expectations that the Bank of England could begin raising interest rates sooner than previously anticipated.

Japan

Japanese equities experienced increased volatility during October despite improving global demand conditions. Political uncertainty surrounding the general election and ongoing supply chain disruptions affected investor sentiment.

Nevertheless, exporters remained supported by relatively weaker yen conditions and continued global manufacturing recovery.

Emerging Markets

Emerging markets delivered mixed results during October as investors remained cautious regarding slowing Chinese growth, rising U.S. bond yields and tightening monetary policies across several developing economies.

Commodity-exporting nations benefited from elevated energy and metals prices, while technology-oriented Asian economies remained supported by robust export demand.

Commodities

Commodity prices remained elevated during October as energy shortages, recovering demand and supply disruptions continued supporting markets. Oil prices climbed to multi-year highs due to tightening inventories and strong mobility recovery.

Natural gas prices remained highly volatile, while industrial metals delivered mixed performance amid concerns regarding slowing Chinese construction activity. Gold prices stabilised as inflation concerns partially offset rising bond yields.