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MONTHLY UPDATE

October 2020

Major global market indices were a mixed bag this month, with emerging market equities faring better than their developed market counterparts. European equities were especially impacted by the prospects of a slowing recovery given the recent spike in Covid-19 infections.

The “risk-off” market environment can be attributed to three major pending events throughout October namely:

  • The U.S. Presidential Elections;
  • A resurgence in coronavirus cases in the U.S. and Europe; and
  • A Democrat and Republican deadlock for an additional U.S. fiscal stimulus package (largely because of the pending U.S. elections).

This, together with the commencement of the third-quarter U.S. earnings season gave investors good reason to remain cautiously positioned throughout October.

Focusing on the U.S. elections, Americans headed to the polls on Tuesday in record numbers. The outcome of the presidential election is still in the balance, although Biden appears to be edging closer to victory.

So far Biden has 253 electoral votes and Trump has 214; a candidate needs 270 electoral votes to win the presidency. The race has been much closer than many expected. In addition, a Democratic drive to win control of the Senate appeared to fall short, with Republicans poised to maintain control of the Senate while the Democrats majority in the House shrank unexpectedly.

There is a real possibility of a divided government, with a Democratic president facing off against an obstructionist Republican Party.

We will provide an update on what the outcome means for investors once the result has been finalised.

As always, we encourage our investors to focus on the long-term – history has shown that whilst the outcome of a U.S. election may create shorter-term volatility, longer-term – its impact is less meaningful. Both candidates also provide specific market opportunities across various geographies and sectors.

Moreover, as we are still in the middle of earnings season, companies’ results and management outlooks will provide a clearer reading of the state of the economic recovery, with results thus far having been promising. In addition, the likelihood of a second round of stimulus in the U.S. may be tabled shortly after the elections, which will be welcomed by investors.

Market moves of the month

SA MARKETS LAST PRICE OCT 2020 MOVES YTD MOVE
JSE ALL-SHARE 51 685 -4,8% -9,5%
RESOURCE 10 47 318 -11,4% -3,9%
INDUSTRIAL 25 73 440 0,3% 6,0%
FINANCIAL 15 9 460 -6,1% -39,7%
SA LISTED PROPERTY 270 -9,2% -53,5%
GLOBAL MARKETS  LAST PRICE OCT 2020 MOVES YTD MOVE
DOW JONES 26 502 -4,6% -7,1%
S&P 500 3 270 -2,8% 1,2%
NASDAQ 10 912 -2,3% 21,6%
EURO STOXX 50 2 958 -7,4% -21,1%
FTSE 100 5 577 -4,9% -26,1%
NIKKEI 225 22 977 -0,9% -2,9%
SHANGHAI 3 225 0,2% 5,7%

 

CURRENCIES  LAST PRICE OCT 2020 MOVES YTD MOVE
USDZAR 16,23 -3,2% 15,9%
GBPZAR 21,05 -2,8% 13,5%
EURZAR 18,90 -3,8% 20,5%

Source: Factset

Explore the chartbook for the month of October.

Market Update (October 2020)

Latest Insights

These and other macro insights are covered in more depth in our latest Market Update above.

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