Market Update

As illustrated in the provided table, the past week witnessed a nuanced trajectory in major global equity markets. The week commenced with a dip due to alarming headlines about surging coronavirus cases and reports of interference attempts by Iran and Russia in the US Presidential election. However, these initial losses were largely mitigated toward the week's end, thanks to the anticipation of additional stimulus measures and robust corporate profit announcements.
Despite the cacophony of news headlines, we continue to advocate for a long-term perspective, steering clear of short-term market fluctuations. While the ongoing suspense around US fiscal stimulus and Brexit negotiations creates market uncertainty, we maintain optimism. It's anticipated that regardless of the US election outcome, a new fiscal stimulus package will be implemented, and talks between the UK and the EU have resumed, indicating a mutual interest in reaching a trade agreement amid the challenges posed by the pandemic.
Furthermore, recent economic data points towards a sustained recovery. The US economy, as indicated by the Fed's Beige Book, displayed growth across various sectors, particularly in housing and consumer spending. The US job market exhibited improvement, evident in the decline of initial claims to a pandemic low of 787,000 and a decrease in continuing claims to 8.37 million.
In the UK, retail sales expanded by 1.5% in September, and although the PMI data showed a slight slowdown, the economy is still expanding, albeit at a moderated pace. Notably, what instills confidence is the strong performance reported by companies this quarter. Of the 135 S&P 500 index constituents that have reported, 114 exceeded earnings estimates by an impressive 17.98%. Despite prevailing uncertainties, companies are expressing optimism about the future, reinforcing market valuations.
This positive trend extends to Europe, where companies like Barclays, Moncler, L’Oreal, Daimler, and Michelin have all surpassed expectations, with strong Q3 performances. Looking ahead, the focus shifts to key economic indicators: US durable goods orders, US and Japanese jobless data, Japanese industrial production, Eurozone CPI inflation, and monetary policy meetings by both the ECB and BoJ. Additionally, Q3 GDP reports from South Korea, Taiwan, and Hong Kong will offer insights into the global recovery's strength. Also, the upcoming 4-day Communist Party meeting in China, starting on Monday, October 26, 2020, will be closely observed for potential market implications.