Economic market update

Equity markets have declined for 2 consecutive months. Rapidly rising bond yields have occurred as investors considered the possibility of global interest rates staying higher for longer than expected.

Geopolitical tensions have also taken centre stage, with ongoing conflict in Ukraine and the Middle East.

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United States

US market sentiment was lower in October due to the expectation of higher interest rates for longer. The S&P 500 returned -2.1% for the month. Energy stocks, which were among the top performers in September, underperformed the broader market. Consumer spending remained robust, and key indicators of business activity pointed to an improvement in industrial activity. The labour market also remains resilient, with steady unemployment and declining jobless claims over the last few months.

European Union flag


Eurozone equity markets delivered negative returns of -1.8% with Health care stocks underperforming. Inflation in Europe eased to 2.9%, and as such the European Central Bank (ECB) did not raise interest rates at their October meeting. UK stocks similarly declined, affected by concerns over the impact of rising interest rates, particularly impacting smaller to medium-sized sectors the most.

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China and Emerging Markets

Emerging Market equity returns trailed behind Developed Markets with investor sentiment impacted by rising bond yields and the Middle Eastern conflict. The MSCI Emerging Markets Index (Unhedged) returned -2.0%. Turkey notably underperformed due to a weakening currency and a drastic Central Bank rate hike to 35% in October, set against an inflation rate above 60%. China’s economy showed signs of slowing down, with the equity market declining amid ongoing stresses in the property sector.

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The Australian market continued weaker performance. The S&P/ASX 300 fell -3.8%, with Small-Cap stocks leading the decline. Utilities was the only sector with positive returns. The strength of retail sales indicates resilient consumer spending, although future discretionary spending may reduce due to mortgage rate increases. The economy’s resilience coupled with a slow decline in inflation led to another rate hike by the RBA at their November meeting.

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Currency and Bonds

The Australian dollar (AUD) weakened against most of the major currencies, declining by -1.9% against the US dollar, -1.7% against the Euro, and -1.3% against the Pound Sterling in October.

Bond yields have risen, with the U.S. 10-year treasury yield reaching 4.90%. The Australian 10-year bond yield also increased significantly to 4.92%, reflecting the stickiness in inflation and the market’s expectation of another RBA rate hike at its November meeting (which has already occurred at the RBA meeting in November).

Read the Market Commentary for September 2023.

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