South Africa\u2019s benchmark stock market index, the JSE All Share Index, fell 2.7% in October, leaving it 4.2% lower for the year to date. That contrasts with developed market stock exchanges, which had a negative month but remained positive for the year to date.<\/p>\n
The US technology index, the Nasdaq, eased 0.6% during October, while the broad-based S&P 500 Index shed 0.9%. That leaves the year-to-date performance of these indices at an impressive 25.5% and 10.6%, respectively. In Europe, the Eurostoxx 50 Index fell more sharply on concerns about the region\u2019s economy, losing 2.7% for the month but still 6.7% ahead for the year.<\/p>\n
The UK FTSE 100 Index also took a 2.8% knock and is in the red, down 0.8% year to date, reflecting the difficulties the UK has had in bringing its inflation rate below 10% and skirting with the recession.<\/p>\n
China had a particularly bad month, with the China Shanghai Index (CSI) 300 losing 5%. This reflects one of the most challenging years for the world\u2019s second-largest economy. China is battling to surmount considerable challenges in its property industry stemming from years of overbuilding, resulting in extreme over indebtedness. Its recovery in the wake of the world\u2019s most extreme shelter-in-place Covid-19 policies also proved short-lived, and investors aren\u2019t happy with the onerous regulations China\u2019s government has put on specific segments of the economy.<\/p>\n
China\u2019s economic fortunes typically affect global economic conditions because they are a significant driver of global growth, determining demand for resources like oil and iron ore. So, if China\u2019s economy is contracting, the oil price comes under downward pressure in anticipation of lower demand for black gold. China also exports a significant proportion of the world\u2019s computers, phones, office machines, and textiles.<\/p>\n
Given its central, but increasingly contentious role in the world economy, professional investors have been weighing whether they should avoid investing in China entirely or whether it will always be too big an investment opportunity to ignore. There are early signs that China\u2019s economy is turning the corner \u2013 bolstered by government stimulus measures. But the jury is still out because of the problems in the property sector.<\/p>\n
October financial market conditions were also marked by the Hamas attack on Israel. Geopolitics has become a bigger consideration in investing over the past few years, given tense US-China relations, countries beginning to onshore production of what they deem to be strategic industries, like defence and computer chips, and Russia\u2019s invasion of Ukraine.<\/p>\n
Though the stock market response to the Hamas attack has been relatively muted, there are concerns that hostilities may spread more widely through the Middle East. Russia\u2019s invasion of Ukraine had an immediate and profound impact on global financial markets and the economy, triggering the most significant increase in inflation in decades and, consequently, the steepest rise in interest rates. MSCI research found that emerging market stock markets were still 12% lower a year after the invasion, and world stock markets were down 8%.<\/p>\n
As we head into the final two months of the year, the outlook for investors remains exceptionally uncertain and unpredictable. Will geopolitics remain a destabilising force in the year ahead? When can we expect interest rates to come down? What are the odds of a recession taking hold at home or globally?<\/p>\n
These questions are hard to answer with any certainty after three years of unprecedented challenges and change. However, investors have always been able to ride out the tough periods in history by ensuring their investments are diversified across asset classes, like equities, bonds, property and, increasingly, alternative assets, and across geographies.<\/p>\n
As always, our advice is to assemble a diversified portfolio and to never try to time the markets. If you have any questions at all, speak to your financial advisor. Disclaimer:<\/strong>\u00a0The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.<\/p>\n \u00a9 FinDotNews<\/p>\n","protected":false},"excerpt":{"rendered":" South Africa\u2019s benchmark stock market index, the JSE All Share Index, fell 2.7% in October, leaving it 4.2% lower for the year to date. That contrasts with developed market stock exchanges, which had a negative month but remained positive for the year to date. The US technology index, the Nasdaq, eased 0.6% during October, while […]<\/p>\n","protected":false},"author":101019,"featured_media":5175,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[59],"tags":[],"class_list":["post-5194","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-market-update"],"yoast_head":"\n
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\n Note:\u00a0<\/em><\/strong>All figures quoted in this article are correct at date of writing.<\/em><\/p>\n