Without sounding like a stuck record, the UK markets were yet again led by macroeconomic and geopolitical events over the course of October with little to no input from the markets underlying earnings season.

The outbreak of war in Israel threatens all sorts of contagion across the Middle East, with the price of oil spiking before closing the month at $85 a barrel. The long end of the US Treasury market collapsed, taking the yield on the long bond back over 5% for the first time in over 15 years. These two events dominating the markets downward pressures. 

Inflation has all but evaporated in the Eurozone, now at 2.9% (with Spain flat and the Netherlands now disinflationary at -0.4%). However the bloc has now slipped into recession. We had a clean sweep of rate pauses, with the ECB holding at 4%, the Fed at 5.5% and the Bank at 5.25%. 

The FTSE 100 closed the month -3.8%, the FTSE 250 -6.5% and AIM All-share -6.6%. The pain in the market was widespread with the consumer discretionary and investment trust sectors bearing the biggest brunt. The investment trust sector remains in the doldrums with discounts now exceptionally wide, a consequence of the over the top AIFM ruling with cost disclosures. 

The oil majors, Shell and BP, both reported stellar profits and announced share buybacks, with Shell leading the charge in beating consensus. UK banks all reported with Lloyds the pick of the bunch. At the bottom of the pile was Standard Chartered, who announced a $900m charge thanks to its exposure to Chinese financial services and property market. In consumer staples, Hein Schumacher the new Unilever CEO, announced his maiden results with their intention to focus on their major brands and less emphasis on their brands respective ESG qualities. 

The above article has been prepared for investment professionals. Any other readers should note this content does not constitute advice or a solicitation to buy, sell, or hold any investment. We strongly recommend speaking to an investment adviser before taking any action based on the information contained in this article.

Please also note the value of investments and the income you get from them may fall as well as rise, and there is no certainty that you will get back the amount of your original investment. You should also be aware that past performance may not be a reliable guide to future performance.

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