Citi Personal Wealth Management

A Rocking October

Monthly Market Snapshot: October 2021

Highlights

Global equity markets powered forward in October – logging their best gains since November 2020 with the MSCI All Country World index surging 5.0%. In the U.S., the S&P 500 rocketed 7.0% higher as debt ceiling fears lifted, corporate earnings beat expectations, and strong seasonal factors kicked in. The NASDAQ, which has been sensitive to rising bond yields, jumped by 7.3%. Japanese stocks underperformed – falling 3.4% as economic growth forecasts dimmed. The 10-year U.S. Treasury yield edged higher – rising from 1.49% to 1.55% by month-end as investors considered a tapering of Fed bond purchases and persistent inflation.

Strong corporate earnings and an easing of debt ceiling fears helped to drive stock prices higher in October. While the U.S. will likely be forced to lift the debt ceiling yet again towards year-end, the removal of the immediate threat led to a more risk-on tone as early corporate earnings reports showed that profits remain robust and on track to rise by about 46% in FY2021.

Citi’s Global Investment Committee (GIC) reduced its overweight to Global Equities from +8.0% to +6.0% and raised its Fixed Income and Cash allocation from a -8.0% to a -6.0% underweight. The GIC modestly lowered its overweights to Asia, UK, Europe ex UK, and Global Healthcare stocks.