Monthly Market Snapshot: October 2020

A monthly update on equity, fixed income, currency, and commodity markets.

Views expressed are those of the authors and are subject to change. Other teams may hold different views and make different investment decisions. While any third-party data used is considered reliable, its accuracy is not guaranteed. For professional or institutional investors only.

Equities

Global equities (-2.5%) fell for the second straight month, ending with a 0.9% year-to-date loss. A resurgence of COVID-19 cases in the US and Europe and the upcoming US elections were foremost in investors’ minds. The US Food and Drug Administration approved the antiviral drug remdesivir for the treatment of COVID-19, while European countries battled a second wave of infections amid record-high numbers of new cases, most notably in France, Spain, Germany, and the UK. The eurozone economy expanded 12.7% in the third quarter, well above forecasts, but growth in the coming months could be challenged by the pandemic. European governments imposed new social-distancing rules in a bid to avoid larger-scale lockdown measures that could strangle the region’s economic recovery. The US grappled with a sharp rise in COVID-19 cases; political uncertainty around the upcoming Senate, House of Representatives, and presidential elections; and the lack of additional fiscal stimulus. China’s GDP grew 4.9% year over year in the third quarter, with a rebound in the services sector helping to broaden the country’s economic recovery.

US

US equities (-2.7%) ended the month lower amid worsening coronavirus trends and heightened volatility ahead of the US presidential election on November 3. At the end of October, the S&P 500 Index suffered its largest weekly decline since March, erasing the strong gains from earlier in the month. A third wave of COVID-19 infections engulfed the country, with the US reporting a record number of cases on October 30. While the timeline for vaccines remains uncertain, the lack of more stringent lockdown measures provided some relief to the market. Negotiations for a fifth coronavirus stimulus aid bill faltered, as Republican and Democratic lawmakers were unable to compromise on some of the most contentious issues, including state and local government funding and liability protections. Senate Majority Leader Mitch McConnell hinted that a new package could…

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