October was another positive month for global stock markets with the MSCI World index rising 2.5%. This is despite a spike in volatility earlier in the month when escalating trade war concerns caused the S&P 500 index to suffer its biggest one-day loss since the Liberation Day fallout in April. However these fears were partially alleviated last week when Trump and Xi Jinping met for the first time in six years and suggested they were closer to making a deal. 

In the UK, although inflation remained at 3.8% for the third month running, this was lower than analysts expected, while food prices declined for the first time since May last year. This led to heightened speculation of Bank of England rate cuts and proved positive for interest rate-sensitive assets such as gilts, which had their best month since December 2023. UK equities were also strong during the month as the FTSE 100 climbed a further 4%, buoyed not just by the prospect of rate cuts but also a slightly weaker pound elevating the value of revenue from overseas.

Full round-up of October market performance 

In the UK, the FTSE 100 index gained 4.09% while medium and smaller companies, measured by the FTSE 250 ex IT index and the FTSE Small Cap ex IT index respectively, rose 0.50% and 1.11%. In the US, the S&P 500 USD index grew 2.34% while in Europe the Eurostoxx 50 EUR index gathered 2.53%. Japanese stocks measured by the Topix JPY index grew 6.20%.

Emerging markets returns were mostly positive, with the MSCI Emerging Markets index returning 4.62% in local currency terms. Latin American equities measured by the MSCI Latin America local currency index picked up 1.67% and Indian stocks measured by the Nifty 50 INR index amassed 4.51%. However Chinese stocks measured by the MSCI China CNY index declined 3.91%.

In the fixed income market, UK government bonds, measured by the FTSE Gilts All Stocks index, gained 2.74% with long dated (over 15 years to maturity) gilts rising 5.47%. Sterling denominated corporate bonds, measured by the Markit iBoxx Sterling Corporates index, returned 2.08%. In the high yield market, the ICE Bank of America Sterling High Yield index increased 0.39%.

In the commodities market, the S&P GSCI USD index, which consists of a basket of commodities including oil, metals and agricultural items, rose 1.35%. Brent crude oil futures slipped 2.23% during the month. In the precious metals markets, the S&P GSCI Gold and Silver indices climbed 3.53% and 3.60% in USD respectively, while in the agricultural markets corn and wheat futures delivered 3.85% and 5.12% in USD respectively.

In currency markets, the pound depreciated 2.19% against the US dollar and 0.51% versus the euro but gained 1.85% against the Japanese yen.