October 2024 Investment Summary

A negative month for the Active range with returns ranging from -0.22% for Active 1 to -0.52% for Active 2 .
*P Acc share class with data sourced from FE analytics as at 31 October 2024 .

October 2024 was a mixed and more volatile month for portfolios generally.

Most major equity markets saw falls in October, with global stocks lowering from all-time highs. Chinese stocks pared back last month’s gains and the Nasdaq and S&P 500 fell from last months near all-time highs, as the S&P 500 ended five months of consecutive gains. Financials and Communications led sector specific performance, while healthcare continued to lag. The FTSE 100’s performance was muted, with lower returns for UK markets following October’s UK budget announcement. The Stoxx Europe 600 Index struggled this month with Industrials and Communication services the only two sectors to register a positive return over the month.

The election race between Kamala Harris and Donald Trump remained on a knife-edge up to election day, as polls showed both candidates tied in key swing states. Government bond prices were higher as the ten-year Treasury yield climbed to 4.28% from 3.74% over the month, with investor focus shifting to the fiscal deficit, which is expected to grow from already elevated levels regardless of who the next US president is. The US economy grew 2.8% in the third quarter of 2024, slowing slightly given the current uncertain political environment. Markets are pricing a further 0.50% of cuts over the remainder of 2024 with a 92% probability of a further cut at the next meeting in November (since confirmed).

US labour market government data this month showed payrolls increased by 12,000 in October, lower than forecasts with the dual hurricanes affecting the payroll collection period. Expectations are for an eventual upward revision at next month’s report. Consumer confidence rose to a six-month high, as household expectations for business conditions and personal finances improved ahead of the US Election. Unemployment data remained at 4.1% its lowest level in three months.

Tensions in the Middle East and the prospect of further escalation in the region remain. Gulf leaders are increasingly frustrated about Israel’s offensives with Oman’s foreign minister recently stating Western powers have a moral obligation to constrain Israel. The IDF offensive against Hizbollah has continued in recent weeks with air strikes in eastern Lebanon. The US has supposedly drawn up a draft plan to end the war, calling for an initial 60-day ceasefire and the withdrawal of the Lebanese militant group and Israeli troops from southern Lebanon. The impact on Brent Crude prices remains limited falling to $73/barrel from $75/barrel in October.

Central banks are striking more dovish tones, following supportive inflation data and some signs of economic softening. The prospect of a soft landing in the US, accompanied by lower interest rates and stimulus in China should be good for the performance of most asset classes, but heightened geo-political tensions remain the most obvious near-term risk to this view. Investors will be awaiting the outcome of the US Election vote having the potential to plot different fiscal and monetary paths for the world’s largest economy.

WS Prudential Risk Managed Active - Tactical asset allocation activity

We currently have an equity overweight of +1.35%, made up of a diversified basket across the US, UK, Asia and GEM. This is funded from European credit and cash underweights. We have also maintained small overweight positions in US Treasuries and real estate (REITs).