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Market Summary – October 2019

15th October 2019

The Author: David Cooper

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Financial strategist, investment adviser and Sales Director for United Advisers

Global equity markets rallied in September with modest overall gains following a somewhat subdued August. Emerging markets occupied the extreme ends of the range, with Venezuela losing over 12% while Argentina gained over 18%.

Steady US data underpinned markets with a sharp rise in consumer spending and unemployment remaining steady at 3.7%. The hope that UK Prime Minister Boris Johnson was ready to present a workable Brexit deal to the EU slightly buoyed European and UK markets.

US Markets

Healthy retail sales figures for August boosted the general feeling that the US economy is still on track.

Lower oil price and no escalation of US-Iran tensions also boosted the sentiment of US investors, while US equities, not focused primarily on President Trump’s political difficulties, made modest gains over the month.

European Markets

European equities rallied during the month despite no tangible progress in Brexit talks and the Supreme Court ruling that Boris Johnson’s proroguing of Parliament was unlawful. Opposition parties did not press a vote of no-confidence, so a general election is not currently a prospect, and there is still hope that the Prime Minister will present a credible Brexit agreement to the EU.

Buoyed by renewed hopes of a compromise Brexit deal over Irish border issue, the Irish stock market bounced back strongly from its steep August fall while elsewhere on continental Europe, economic data continued to disappoint, with retail sales and inflation both falling.

Emerging markets

Emerging markets recovered in September, rising broadly in-line with developed markets. Returns were led by South Korean from an up tick in memory chip stocks, and Indian equity markets following news from the Indian Government of corporate tax cuts.

Currencies

Following a reasonably flat August, the Pound made modest gains against most major currencies in September. Most notably against the Yen, often regarded as a safe-haven currency during geopolitical stress, which weakened following news that the extradition bill behind the Hong Kong riots was to be withdrawn.

The dollar gained ground against several currencies because of activity elsewhere in the market rather than US news. Positive sentiment surrounding a trade deal with Japan, and hopes for a deal with China, were primarily offset by concerns over the prospect of President Trump being impeached.