Market Overview
Market Summary
|
MSCI World Index |
+6.36% |
|
S&P 500 Index (SPX) |
+5.89% |
|
German DAX Index (DAX:IND) |
+5.97% |
|
French CAC 40 Index (CAC:IND) |
+2.28% |
|
Nikkei 225 Index (NKY:IND) |
-3.50% |
|
Brent Crude Oil |
-16.94% |
|
$71.77 a barrel |
|
|
Gold |
+13.23% |
|
$2,634.58 an ounce |
|
|
US Dollar (DXY) |
-10.65% vs. yen |
|
-3.72% vs. euro |
While financial assets generally were strong in the third quarter, volatility trended higher as markets continued to be influenced by efforts to read the rate-cut tea leaves.
Notably, there were signs of rotation away from the performance dynamics that had dominated the first half of the year, as value outperformed growth, small outperformed large, and non-US outperformed the US. The S&P 500 Index returned 5.9% for the period, while the MSCI World Index gained 6.4%.1
Under the Influence
One market idiosyncrasy investors have been forced to contend with for much of 2024 has been the presence of two distinct gravity wells of influence. One is the Goldilocks scenario in the US, as cooling inflation, a softer labor market, continued economic growth and strong corporate earnings have converged to raise hopes that a soft landing may yet be realized. Risk appetites in the US have remained elevated, supporting equity markets and credit spreads.
The other is the continued weakness in China, where both structural and cyclical issues have weighed the country’s manufacturing base as well as global assets dependent on it, including a range of industrial commodities like copper and oil. Risk appetites in China are depressed and have also weighed down other countries in the region.
More recently, however, signs have emerged that the strength of this duality may be waning. In mid-September, the Federal Reserve kicked off its much-anticipated rate-cut cycle, announcing the first federal funds rate reduction since the early-2020 onset of Covid-19. The oversized 50 basis point cut was
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