Five issues for investors to watch

Weekly Market Compass: Can a split US Congress find agreement on policy? Is India due for a central bank shakeup?

Time to read: 6 min

Last week, the US experienced a deepening split in political leadership, which dominated headlines. And yet, that was just the tip of the iceberg in terms of events that are impacting global markets. Below, I recap five key events from last week and highlight five issues to watch moving forward, including whether there are grounds for new alliances among US President Donald Trump and the Democratic House.

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The midterm results are in, but what do they mean for markets?

Assessing the impact of the US midterm elections on four key areas

Arnab DasTime to read: 6 min

Going into yesterday’s midterm elections, our base case scenario was that Democrats would take the House while Republicans would retain the Senate. That has come to fruition, and has had an initially supportive effect on markets, with US stocks and bonds supported and the dollar weaker. This US market response has in effect eased global financial conditions, supporting other currencies and financial markets in general, including emerging markets.

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Anticipating the US midterm results

Weekly Market Compass: Short-term volatility is likely, but what could results mean for the longer term?

Time to read: 5 min

October has come to an end — and what a miserable month it was for stocks. The Dow Jones Industrial Average fell more than 5%, the S&P 500 Index lost 6.9% (its worst month in seven years), and the Nasdaq Composite Index dropped 9.2% (its worst month since November 2008).1 Looking beyond the US, the MSCI EAFE Index gave up 8% during the month, while the MSCI Emerging Markets Index lost 8.7%.1 And beyond stocks, major bond indexes such as the Bloomberg US Aggregate Bond Index and the FTSE Russell Emerging Markets Broad Bond Index also gave up some ground.1 Real estate investment trusts lost 3% as represented by the MSCI REIT US Index, while commodities lost 2% as represented by the Bloomberg Commodity Index.1 One of the few bright spots in October was gold, with spot prices rising 2.8%.1

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October lives up to its frightening reputation for investors

Weekly Market Compass: Stock market turbulence continues

Time to read: 5 min

Once again, the month of October has been living up to its frightful reputation for wreaking havoc on stock prices: 1929 and 1987 are prime examples, and we can now safely say that 2018 will also go down in history as an illustration of October’s ability to scare investors. Unfortunately, I don’t foresee this volatility easing too much over the next few weeks.

Volatility and sell-offs began earlier in the month but accelerated last week. On Oct. 24, stocks experienced a major sell-off that erased all the gains for the year in many major US indices. But that was just the beginning of the most recent roller coaster ride: The next day saw a powerful recovery, while the day after that brought another significant sell-off. As of Oct. 26, virtually all major indices around the world were in negative territory — some actually posting double-digit losses for calendar year 2018.1 In this risk-off environment, it’s not surprising that investors flocked to US Treasuries, driving the 10-year yield down to 3.077%.1

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Five issues rattling global markets

Weekly Market Compass: Trade tops the list once again, while central banks take center stage this week

Time to read: 5 min

There was no rest for the weary last week, as geopolitical developments came fast and furious, and capital markets reacted. Below, I cover five important issues that have continued to contribute to stock market volatility — some of which flew under the radar during the week’s flood of news — and highlight five issues to watch this week.

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