Market Commentary

In October, investor appetite for risk flourished amid hopes for a de-escalation in the US-China trade fiasco, lower odds of a disorderly no-Brexit deal, and as central bankers conveyed a message of accommodation across the globe. Meanwhile, incoming economic results revealed a mixed outlook on the state of the global economy, while the corporate earnings season got off to a healthy start. Importantly, while Chinese officials cast doubts about reaching an all-encompassing long-term trade deal with the US, the two sides indeed got closer to signing a “phase one” agreement and made some important concessions to do so.

november 2019

Global equity markets thrived in the environment of amicable US-China trade deliberations and unrelenting support from central banks, with the MSCI All Country World jumping to its highest level since early-2018. October was a month of bullish-breakouts. The S&P 500 demonstrated some notable momentum and reached a new all-time high. Meanwhile, investors began to allocate towards cheaper stocks outside of the US and international bourses broke higher, with the MSCI World Ex-US index breaching a 13-month high. Similarly, emerging market equities posted their best monthly gain since June on the heels of easier Federal Reserve monetary policy and renewed hopes for a trade truce that boosted appetite for riskier assets. However, Canadian equities did not participate in the rally, with weakness in the energy space largely countering some solid gains in gold stocks.

As widely anticipated, the Federal Reserve delivered its third straight rate cut and hinted subtly towards a sidelined approach for now. However, the hawkish-leaning tone to the communique was met with a dovish market response, with the bond market seemingly unconvinced that the Fed is done easing at this time. Instead, the bond market took these developments in stride, with investors actually raising their wagers for further rate cuts in response. Of note, the short-end of the curve declined on growing bets for Federal Reserve easing, while the longer-end moved slightly higher and saw the yield curve steepen during the month.

In currency markets, the US dollar capped its worst month since January 2018 as easing trade tensions curtailed the greenback’s safe haven status. In contrast, the euro posted its strongest monthly gain since early-2018, while the biggest winner in October was the pound amid receding fears of a messy divorce between the United Kingdom and the European Union.

And in the commodity space, oil prices eked out a modest gain as speculation for a near-term détente on trade overshadowed the latest swelling of US crude stockpiles. Gold remained well-bid even as geopolitical angst simmered throughout the month, while the weaker dollar also buoyed bullion prices in October. Finally, copper rose for a second month on renewed hopes for a de-escalation in the trade spat, while supply disruptions at the world’s top producer in Chile also boosted prices of the red metal.


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