Markets in October

Marknader i oktober Oktober har varit en volatil månad för marknaderna då investerare fokuserar på det växande geopolitiska risklandskapet: kriget mellan Hamas och Israel och det fortfarande närvarande hotet om dess möjliga internationalisering, det pågående kriget i Ukraina och växande handelsfriktioner mellan USA och Kina efter USA:s exportbegränsningar för grafit som används vid produktion av elfordon och AI-mikrochipexport. Marknaderna har också varit oroliga för Q3 företagens resultat och prognoser för Q4 med prestanda för Magnificent 7, Alphabet, Amazon, Apple, Nvidia, Microsoft, Tesla och Meta Platforms, starkt i rampljuset. Det finns oro för att dessa aktievärderingar förblir alltför höga och att obligationsinkomster kan bli mer attraktiva på en relativ riskbasis.

October has been a volatile month for markets as investors focus on the growing geopolitical risk landscape: the war between Hamas and Israel and the ever-present threat of its possible internationalization, the ongoing war in Ukraine and growing trade frictions between the US and China following US export restrictions on graphite used in the production of electric vehicles and AI microchip exports. Markets have also been concerned about Q3 corporate earnings and forecasts for Q4 with the performance of the Magnificent 7, Alphabet, Amazon, Apple, Nvidia, Microsoft, Tesla and Meta Platforms, heavily in the spotlight. There are concerns that these equity valuations remain too high and that bond income may become more attractive on a relative risk basis.

The market also struggled with a rising possibility of $100 per barrel of crude oil. The combination of rising and continuing oil prices is not good for stock markets or the economy. One of the catalysts pulling stocks down this month is rising interest rates on US government bonds. The advance estimate by the Commerce Department’s Bureau of Economic Analysis of GDP at 4.9% last quarter, the fastest since the fourth quarter of 2021, was the latest sign of the country’s economic resilience despite high interest rates and solidified the “higher for longer” scenario. But with rising interest rates, the strengthening of the dollar and stock market volatility increasing in October, the renewed tightening of financial conditions has done some of the work for the Fed, thereby reducing the need for further policy action. Despite the decline in personal savings, especially among low-income consumers, the US consumer, at least for now, appears to remain resilient with retail sales surprising to the upside. However, the resumption of student loan repayments in October may reduce spending in the fourth quarter. Continued tightening in the labor market and rising levels of business activity, with the S&P Global Flash Composite PMI reaching a 3-month high of 51.0 in October, the services PMI also at a 3-month high, rising to 50.9, and the manufacturing PMI also climbing to 51.1, provide hope that the U.S. economy may have grown at its fastest pace in any quarter in nearly two years in the third quarter, again defying recessionary warnings and raising the possibility of a soft landing.

However, fears about the euro area economy increased in October. Although headline inflation fell in September in the euro area to 4.3%, down from 5.2% in August, there are concerns that rising energy prices, due to the conflicts in the Middle East and Ukraine, could be a headwind for inflation. Business activity appears to be slowing with the Eurozone HCOB flash composite PMI falling to 46.5 in October from September’s 47.2 and the lowest since November 2020.

About the Viking

With Viking’s signals, you have a good chance of finding the winners and selling in time. There are many securities. With Viking’s autopilots or tables, you can sort out the most interesting ETFs, stocks, options, warrants, funds, and so on.

Click here to see what Vikingen offers: Detailed comparison – Stock market program for those who want to become even richer (vikingen.se)