North America
US equity market indices were mixed, with the S&P 500 and Dow Jones Industrial Average declining 0.96% and 2.66% in US Dollar terms, respectively. Focusing on the Dow Jones Industrial Average Index, performance was dragged down primarily by McDonalds and Goldman Sachs. Meanwhile, the tech-heavy Nasdaq Composite returned 0.16% is US Dollar terms, with performance across the Magnificent Seven megacap tech-stocks split: Tesla stock generated significant returns as it reported 17% rise in QoQ net income, well ahead of market expectations. Microsoft, Nvidia and Google also generated moderate gains across the week. Meanwhile, the value of Apple, Meta and Amazon declined. Investors also prepare themselves for the upcoming earnings reports for Alphabet, Meta Platforms, Amazon, Apple and Microsoft this coming week. On the economic growth front, the US manufacturing and services PMIs came in at 47.8 and 55.3, respectively, both above consensus expectations and higher than the month prior, offering some relief to investor concerns for potential weakness in the US economy. In the US, existing home sales for September fell to the lowest level since 2010, declining by –1.0% to 3.84m, below consensus expectations. However, new home sales increased by 4.1% to 738,000, well above consensus expectations. Despite the increase in new home sales, the latest data indicates further tightness in the US housing markets as mortgage rates remain elevated. With the US presidential elections set for Tuesday 5 November, polls indicate a tight US Presidential race between Vice President Kamala Harris and former President Donald Trump. Investors have also started to focus on the possible outcome for the US Senate and US House of Representatives, with growing signs of a potential Red Sweep across all elements of US government.

Europe & UK
European equity indices closed lower this week as the continent continues to face a number of potential headwinds . The pan-European STOXX Europe 600, German DAX and French CAC 40 declined by 1.17%, 0.99% and 1.52% in local currency terms, respectively. Weakness in the Euro relative to the US Dollar resulted in the indices falling by 1.74%, 1.55% and 2.08% in US Dollar terms, respectively. Investors were left disappointed with corporate earnings across several large European companies, such as German auto manufacturer Mercedes-Benz Group AG, French spirits maker Remy Cointreau SA and Swedish household appliance maker Electrolux AB. In the Euro area, the manufacturing PMI for October remained in contractionary territory at 45.9, while services activity dropped to 51.2. Investors remain cautious with European equities ahead of the US elections, the results of which could have significant implications on the trade relationship between the European Union and the US. Meanwhile, the UK FTSE 100 Index fell by -1.29% in local currency terms and -1.82% in US Dollar terms. UK Equity majors Lloyds Banking Group, Barclays and Close Brothers declined in light of an ongoing car financing probe that could result in significant fines for each entity. The UK’s composite PMI decreased from 52.6 in September to 51.7 in October, below consensus expectations, signalling a potential slowdown in economic activity and increased probability of further rate cuts by the Bank of England (BoE) in November. With the UK Labour Government set to announce their budget on Wednesday 30 October, investors will be eager to see the policies put forward by UK Chancellor Rachel Reeves. With UK’s GDP/Debt ratio was 98.5% at the end of September, the room for government fiscal policies are incredibly limited. Early reports suggest potential measures may include an increase in employer national insurance contributions and adjustments to fiscal rules, allowing the government additional borrowing capacity in the future.

Japan
Similar to its other developed market peers, Japanese equities also declined across the week. The Nikkei 225 Index declined by 2.74% in local currency terms and the broader TOPIX Index losing 2.63% in local currency terms. With the value of Japanese Yen falling relative to the US Dollar, the Nikkei 225 Index and TOPIX index declined by 4.52% and 4.41% in US Dollar terms, respectively. Japanese equity markets continue to endure headwinds in light of continued political instability and further uncertainty over the implementation of future monetary policies by the Bank of Japan (BOJ). Following newly elected Prime Minister Shigeru Ishiba’s decision to call snap elections in early October, Japan went to the polls on Sunday 27 October. Political polls prior to the election date indicated that the ruling party, the Liberal Democratic Party (LDP), had lost significant public popularity due to increased cost of living, slow wage growth and the slush-fund scandal. Election results indicate that the LDP fell short of a majority for the first time since 2009. Even with the inclusion of their long-term coalition partner Komeito, the LDP are still short of the 233 seats required in the lower house. With significant uncertainty about the new Japanese government, the Bank of Japan is likely to slow any further monetary action. At the time of writing, Japan’s core consumer price index (CPI) showed an easing of inflation in September, as was expected, thanks to the reinstatement of electricity and gas subsidies. The core CPI (excluding fresh foods but including oil products) rose 2.4% year on year, compared with 2.8% in August.