Monthly Market News October 2024 – Market trends

Alexandre Gauthy - Economist

October was marked by a clear outperformance of US equities compared with other regions of the world, rising long-term bond yields and a stronger dollar. Our expert, Alexandre Gauthy, analyses market trends in October 2024.

Equity markets: better performance by US equities

Behind the rise in the global equities index lie significant disparities by region. U.S. equities outperformed all other regions, largely due to the dollar's appreciation during the month. The strength of the US economy and the increased probability of Trump's victory were two factors explaining the outperformance of US stock markets. The Nasdaq index hit an all-time high at the end of the month, thanks in part to Alphabet's strong earnings release, with cloud-related sales accelerating. Corporate earnings season was in full swing at the end of the month. The stock market rally came at a time when bond yields were rising across the curve. The positive correlation between equities and long-term yields can be explained by the good US economic figures.

Bond markets: US bond yields rise sharply

Since the Fed's decision to cut its key rate by 0.50% in September, the US 10-year yield has risen by 0.50% due to better economic figures in the US, reducing the need for an aggressive Fed rate-cutting cycle. Yields on German government bonds with the same maturity also rose. As a result, the performance of eurozone government bonds was negative in October. Euro-denominated corporate bonds were still able to post a performance close to 0% for the month.

Central banks: no surprises

The ECB cut its key rate by 25 basis points in October, in line with consensus expectations. This monetary decision mainly reflects two factors: weakening economic indicators, which pose a greater risk to growth, and the fact that the Governing Council is more convinced that inflation is moving sustainably towards the target.

Currencies: Appreciation of the dollar

The dollar appreciated not only against the euro, but also against most other currencies. Long-term interest rate trends benefited the dollar. Indeed, long-term bond yields in the eurozone rose by less than in the United States. The prospect of Trump's return to the White House was also a supportive factor for the greenback.

Commodities: gold shines, oil retreats

The price of gold continued its upward trend, reaching new highs. Gold prices advanced even as long-term interest rates rose (which should have been a negative factor for gold prices, all other things being equal).

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