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Global Markets

Global Market Outlook

Global equity markets retraced, 2020 continues to surprise the market with pandemic, the shutdown of the global economy, the deepest recession since the 1930s, and global equity market collapse. Tighter valuations increase the risk of further market volatility, particularly ahead of the divisive U.S. elections.

Technology and Healthcare stocks valuations are elevated, and the U.S. federal elections create uncertainty around tax changes, government regulations and the re-escalation of China/U.S. trade tensions. Beyond this, the market looks set for a rotation away from technology/growth leadership toward cyclical/value stocks. This also implies a rotation toward non-U.S. stocks with Europe and emerging markets the main beneficiaries.

The unemployment rate continues to decline and fell by more than expected in coming months. However, the weekly series of payrolls indicated that job losses had actually increased over the month.

Index Performance

S&P 500NasdaqRussell 100010-Year Treasury
-3.92-5.16-3.770.68
M (%)M (%)M (%)M (%)
4.0924.467.55-1.24
YTD%YTD%YTD%YTD%
Yahoo Finance, (As of September 30, 2020)
Global IndexSeptemberYTD
Hang Seng (China)-6.82-16.78
Kospi (Korea)0.075.93
Nikkei (Japan)9.68-1.99
Sensex (India)-1.45-16.84
Jakarta Composite (Indonesia)-7.03-22.69
Bovespa (Brazil)-4.8-18.42
IPC All-Share (Mexico)1.68-13.97
Merval (Argentina)-11.9-0.99
ASX 200 (Australia)-4.04-12.99
EUROPE  
DAX (Germany)-1.43-3.69
CAC 40 (France)-2.91-19.65
Dow Jones Russia Index (Russia)-6.14-23.73
FTSE 100 (United Kingdom)-1.68-22.25
Yahoo Finance, (As of September 30, 2020)

America

The November election brings more volatility in the stock market. A Biden victory with Democrats sweeping both chambers of Congress would likely generate the most short-term volatility coupled with US – China trade war.  Strong Recovery is expected as a result of economic re-opening, fiscal- monetary support.

Europe

The Europe direct fiscal policy boosted by state guarantees for corporate debt and the European Central Bank’s support for bank lending through the TLTRO3 program. The most significant action has been the European Recovery Plan, a €750 billion (6% of GDP) package of loans and grants that will be financed by the issuance of bonds jointly guaranteed by all 27 members of the European Union. Europe’s recovery should continue over coming quarters. A hard Brexit on World Trade Organization terms is likely impact on market.

Australia

The economic recovery has been steady in country, but much of this has been easy lifting and some caution about the outlook is warranted given stretched household budgets and limited inbound tourism.  Domestic economy being cushioned to some degree by recent monetary and fiscal policy actions.. The Australian government is set to announce new measures in the October budget. Low demand from Asian market especially from China is the concerning issue for many sectors.

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