Much of the losses were attributable to a steep decline on Thursday, which pushed indices lower for the month of October. The Nasdaq Composite fell 2.8% for the session, its worst drop in nearly two months, as tech mega caps sold off following earnings from Meta Platforms and Microsoft. While results were better-than-expected, investors were concerned about the significant growth in capital expenditures.
Stocks did rebound on Friday, but this was not enough to push them back into positive territory overall. This was supported by strong revenue and profit from Amazon, which helped to offset a disappointing jobs report in which employers added just 12,000 jobs in October, although this was impacted by hurricanes and strikes. For the week, the S&P 500 dropped 1.4%, the tech-heavy Nasdaq lost 1.5% while the Dow Jones Industrial Average fell 0.2%. Meanwhile Treasury yields ticked higher over the week, with the 10-year note closing at 4.361%, its highest level since early July. This marked its seventh consecutive week of gains, its longest run since October 2022.
European markets also experienced a weekly loss, with the STOXX 600 down 1.5%. This was despite strong performance seen on Friday whereby banks, which were some of the top gainers for the week, rallied. The latest eurozone data releases showed gross domestic product (GDP) doubling in the third quarter, while headline inflation came in slightly higher than expected at 2%. This prompted traders to moderate their expectations for the European Central Bank’s rate cut path. Meanwhile Swiss inflation fell to its lowest level since July 2021, rising by 0.6%, prompting hopes for further Swiss National Bank rate cuts.
Losses were also seen in China, despite an improvement in manufacturing purchasing managers’ indices (PMI). Both the official and Caixin’s PMIs moved back into expansionary territory in October. For the week the Shanghai Composite fell 0.8% while the Hang Seng experienced a 0.4% loss. Japan’s Liberal Democratic Party coalition failed to secure a majority in the election over the weekend, the first time in 15 years that it has not controlled the assembly. The yen was initially weaker after the result amid political uncertainty and its implications for the Bank of Japan. Despite the uncertainty, Japan’s Nikkei 225 added 0.4% for the week.
The value of your investment can fall as well as rise in value, and the income derived from it may fluctuate. You might get back less than you invest. Currency exchange rate fluctuations can also have a positive and negative affect on your investments. Please note that EFG Harris Allday does not provide tax advice. Past performance is not a reliable indicator of future performance.
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