October usually has a bad reputation and is always approached with some apprehension by investors. In this case, too, it was no less. The major stock markets closed lower, maintaining a certain climate of uncertainty and volatility. The reasons for the worsening market tone were:

  • The outbreak of a new conflict between the Israeli and Palestinian people, which once again highlighted the fragility of the situation in the Middle East.
  • The worsening global economic situation, especially in Europe and China.
  • The high level of bond yields, with the US Treasury reaching a peak of 5%.

As said initially the main world stock markets, after an attempted recovery in the first few days of the month, they all closed lower. In the United States, the S&P 500 closed at -2.20% and the Nasdaq at -3.50%. In Europe, there were negative performances of -1.80% for the Euro Stoxx50, -2.80% for the DAX and -2.30% for the FTSE MIB. Hardest hit was the Swiss stock exchange, which closed the month with -4.40%. The Asian market also suffered, with Hang Seng -2.30%, Nikkei -3.30% and CSI 300 -2.90%. The only positive note was gold, which gained over 6% during the month.

The series of central bank meetings ended with a pause in rate hikes, which were deemed at an appropriate level to maintain sufficiently restrictive financial conditions. For the second time in a row, the Federal Reserve opted for stable interest rates. They maintained their range between 5.25% and 5.50%. This decision was widely expected by the market, and as a result, investors’ attention has shifted to the future path of monetary policy in the US, also considering the recent rise in bond yields, with ten-year government bonds above 5%, a level not seen since 2007. In addition, macroeconomic data indicated that US inflation, although slowing, stood at 3.7% in September, still above the 2% target. Even the European Central Bank did not intervene and confirmed its official rate at 4.50%. Although inflation is still above the central bankers’ target range, the sharp economic slowdown and the new increase in interest surcharges in the peripheral states leave little room for further tightening of monetary policy.