Monthly Comment - October 2024

October 2024 witnessed a volatile month across global financial markets, with
mixed performances across various asset classes. Here's a comprehensive
summary of the key developments :

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Equities

In October 2024, global equities experienced a notable decline, with
developed market equities posting a negative return of 2.0%. In the U.S., growth
stocks slightly outperformed value stocks but still saw a 1.8% drop on average,
reflecting investor apprehension over macroeconomic uncertainties. Among
sectors, technology showed resilience, supported by positive earnings surprises
from key players, including major tech firms announcing robust third-quarter
results.

In Europe, the market decline was accentuated by concerns over slowing
economic growth, with Germany's industrials being among the hardest hit due to
persistently weak demand and inflationary pressures. In China, equities faced
additional strain amid concerns over real estate sector vulnerabilities and
government interventions to stabilize market sentiment.

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Key company news:
The "Magnificent Seven" tech giants (Microsoft, Alphabet, Amazon, Meta
Platforms, and Apple) were in focus, constituting about 31% of the S&P 500's
weight.
Tesla, Philip Morris International, and Netflix each saw stock price gains
exceeding 10% after strong Q3 results.
Nvidia reached a new record high, buoyed by positive earnings from Taiwan
Semiconductor.

Japan

Japan's Nikkei 225 index was a bright spot, providing a 3.06% positive
return. This came despite concerns over tighter monetary policy and political
uncertainty following recent election results.

Fixed Income
Bonds delivered negative returns as global government bonds fell by 1.2%
(USD, hedged terms) due to rising yields across major markets. U.S. Treasury
yields rose as market participants anticipated potential return of inflation
pressures. In Europe, the European Central Bank cut its interest rates, but
hawkish commentary and persistent inflationary pressures pushed bond yields
higher. China's bond market remained stable, supported by targeted policy
measures to boost liquidity amid economic slowdown fears. Global investment
grade bond prices declined, ending the month 2.7% lower. In Europe, high yield
bonds were relative outperformers, supported by expectations of the ECB's easing
cycle. Emerging Market Debt (EMD) closed with a -1.8% return, pressured by a
strong US dollar. The DJ Sukuk Index, a benchmark for Shariah-compliant
investments, fell by 1.5%.
Currencies

The U.S. dollar strengthened against major currencies, driven by safe-
haven demand amid global equity market declines and expectations of higher-for-
longer interest rates in the U.S. The euro weakened slightly as economic data

highlighted persistent growth challenges within the eurozone. The Chinese yuan
saw continued depreciation pressures, prompting government intervention to
stabilize the currency amid broader concerns about China's economic outlook.

Interest Rates and Central Bank Decisions
Federal Reserve (Fed)

The Fed maintained its cautious stance, with market expectations shifting
towards a more gradual re-pricing of anticipated rate cuts. The next Fed meeting
on November 7 is expected to result in another quarter-point cut to the benchmark
short-term borrowing rate.

European Central Bank (ECB)

The ECB lowered its three key interest rates by 25 basis points in October
2024. The deposit facility, main refinancing operations, and marginal lending
facility rates were set at 3.25%, 3.40%, and 3.65%, respectively.

Bank of Japan (BoJ)

The BoJ maintained a hawkish tone at its October meeting, contrasting

with other major central banks.
China's central bank implemented measures to ease monetary conditions, aiming
to stimulate growth and alleviate pressures on key sectors, particularly real estate.

Inflation and Employment Data

‍
United States

‍
The September CPI report showed headline inflation at 2.4% year-over-year,
the slowest annual increase since early 2021.
Core inflation remained elevated at 3.3%.
The unemployment rate fell to 4.1% in September, with nonfarm payrolls rising
by 254,000, exceeding expectations.

‍
Europe

‍
Eurozone inflation accelerated to 2% in October 2024, up from 1.7% in
September.
Economic activity across the Eurozone continued to contract in October, with
new orders and business confidence decreasing for the fifth consecutive
month.

‍

United Kingdom
The UK's annual inflation rate fell to 1.7% in September 2024, the lowest since
April 2021.
Commodities
Gold: Prices for gold fell as rising yields and a stronger U.S. dollar reduced the
appeal of non-yielding assets. The decline highlighted the inverse correlation
between real yields and gold demand during periods of monetary policy
uncertainty.
Oil: Crude oil prices remained volatile, reflecting supply-side constraints amid
geopolitical tensions and fluctuating demand forecasts. U.S. shale production
showed signs of plateauing, contributing to market jitters.
Copper: Copper prices edged lower amid weak industrial demand, particularly
from China, where economic concerns weighed heavily on commodity-intensive
industries. The outlook for copper remains tied to China's industrial recovery and
global economic sentiment.

Outlook for November 2024

‍
As we move into November, market attention will be focused on several key
factors:
1. The upcoming US presidential election and its potential impact on economic
policies and market sentiment.

2. Continued geopolitical tensions, particularly in the Middle East, which could
affect energy prices and overall market stability.

3.The Federal Reserve's next policy meeting on November 7, with expectations
of another interest rate cut.

4.Corporate earnings reports, especially from the tech sector, which could
significantly influence market direction.

5. Ongoing concerns about global economic growth, particularly in Europe and
China, balanced against the resilience of the US economy.
Investors should remain cautious, as volatility appears "locked in" ahead of these
significant events. The interplay between inflation trends, central bank policies, and
geopolitical developments will likely continue to shape market dynamics in the coming
month.

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