October is generally known in the stock exchanges as an unstable month. This year was not an exception in this trend. Market trends were influenced by economic data and the ebola crisis, which hit unexpectedly some developed countries. Just to get an idea about the volatility last month: Dow Jones moved more than 1,500 points, S&P highest and lowest marks were between 200 points and Nasdaq moved more than 500 points. The debate was whether the negative trend was a correction or a real downward trend after these positive years.
The correction in US exchanges last month stopped around the second week and the markets turned again into positive. This trend was also pushed by the good third quarter GDP, which exceeded the analysts’ predictions. Another relief was that the Federal Reserve announced that interest rates would maintain the current situation despite the end of the quantitative easing policy.
Europe lived the worst situation, as the constitution of the new European Commission led by Mr. Juncker is taking a very long time. This is important, as the European Union has an unstable balance between common institutions and countries’ interests. On the other hand, the German machine is failing. After the fall in the second quarter, it is expected that third quarter GDP will confirm another recession (technically, two negative quarters in a row). The perfect storm took place with the economic crisis in France, the unstable political situation in Italy and the results of the bank stress test, which did not totally clear up doubts. Banks suffered a hard correction.
Latam main news were related again to Brazil. Socialist candidate Marina Silva, who was expected to be in the second round in the presidential election, lost this chance as socialdemocrat Aecio Neves obtained a better result to fight against President Rousseff. Finally, Rousseff gained a second term but with a very little difference (51- 49). Markets bet for Neves, with a more center-right programme, and reacted negatively after Rouseff’s victory.
In Asia, warning signals came again from China, as the economy is growing at a lower pace. Some figures offer many doubts about a future evolution. Crossing the sea, Japan has reacted with more Abenomics (the expansive programme organized by Prime Minister Abe). Bank of Japan will enlarge the monetary expansive programme in another attempt to move the economy of the second largest Asian giant, which lives in an eternal crisis since the 90s.