The biggest monthly drawdown in 5 years

Wealth

The biggest monthly drawdown in 5 years

October was the worst month in recent history for equity markets on a global scale. The MSCI global index recorded a loss of 7.14% for the month, making it the biggest one-month loss in the history of the index. 

October was the worst month in recent history for equity markets on a global scale. The MSCI global index recorded a loss of 7.14% for the month, making it the biggest one-month loss in the history of the index. The selloff was sparked by a sharp decline in US markets, with the S&P 500 closing 7.13% lower for October, the biggest monthly drawdown in 5 years. This market correction was sparked by fears that the US economy could begin to slow down on the back of increasing interest rates, the ongoing trade tensions between the US and China, and some concerns surrounding the Italian budget.

The local markets were not spared and the JSE all-share index closed 5.96% lower for October. The largest contributor to the decline was Naspers, which lost a massive 15.04% for the month. Fortunately, this is where the bad news ends. In the first two trading days of November, the local market recovered by 3.56%, driven by Naspers with an impressive recovery of 10.07% in two days.

More good news is that the price of Brent crude oil is edging lower and trades at about $72.55 per barrel. The rand is also gaining some ground against the USD and trades at R14.29 to the greenback.

Internationally, US nonfarm payroll rose a stronger than expected 250,000 in October, while the unemployment rate held steady at 3.7%. Average hourly earnings rose 3.1% compared to 2017.

US President Donald Trump tweeted on Thursday that he had “very good” talks by telephone with Chinese president Xi Jinping on the trade conflict between the two economic giants and that meetings were being planned between him and his counterpart at the G20 meeting in Buenos Aires later this month. The news supported markets.

US politics is set to take centre stage this coming Tuesday as congressional and certain governor races will be contested in the midterm elections 2018. This will give an indication of President Trump’s chances of winning a second term and could have an impact on how he manages the US economy for the remainder of his current term. The old saying still rings true that when the US sneezes, the rest of the world catches a cold.

 

Kind regards,

SECURITAS – Wealth Management


























Market data provided by I-Net | News article provided by Securitas with 4D Wealth

Fanie Wasserman, B. Com (Hons)(UJ), PDFP (UOVS), CFP®, fanie@securitas.co.za
Johan Steyn, RFP®, Cell. 082 680 9510, johan@securitas.co.za
Albert van der Linde, B. Com (US), B. Com (Hons)(UP), Cell. 076 087 3084, albert@securitas.co.za
Hannes Bresler, CFP®, B. Com (Hons)(UJ), Pr. Tech Eng, Cell. 082 823 7973, hannes@securitas.co.za
Michelle Kleinhans, 082 850 3092, michelle.kleinhans@securitas.co.za