What a month!

3rd November 2014

Ian Copelin, Investment Director, my wealth comments “October was an extremely volatile month.  Equity markets fell heavily at the start of the month as risk aversion took hold (please see my earlier market updates, titled ‘a perfect storm’ and ‘halloween comes early’), due to concerns about slowing global economic growth, risks of global deflation, weakness in the oil price, ISIS and the Ebola virus.  However, equity markets rallied strongly during the second half of the month as better-than-estimated corporate earnings and economic data eased concerns and suggested that the US economy is strong enough to withstand higher interest rates (especially given the tailwind of lower oil prices).

To top it off, markets were also given a Halloween treat on Friday (31 October) by the Bank of Japan which unexpectedly raised its annual target for monetary expansion to ¥80 trillion ($700 billion).  The announcement boosted investor confidence sending equity markets higher and pushed both the Dow Jones and S&P 500 indexes to record new closing highs.  After a swing of 1,540 points during the month, the Dow Jones ended October up 347 points (or 2.04%) at 17,390.52, while the S&P 500 closed up 45.76 points or 2.32% at 2,018.05, after a swing of nearly 200 points.

Whilst the recent equity market sell-off may have been unsettling, it was important not to panic:  by remaining invested in the market despite the sell-off earlier in the month many investors actually had a happy Halloween.”