Markets welcomed signs of an easing in geopolitical
tensions in October, with risk assets generally outperforming
traditional safe havens. The US and Chinese authorities moved
closer to agreeing a partial deal on trade, while the UK once
again edged back from the precipice of a no-deal Brexit. Global
central banks reiterated their dovish stances and the US
Federal Reserve cut interest rates for the third time this year.

Despite the risk on sentiment, a strong rally in the Pound
meant that even the best performing equity markets were flat
or down in Sterling terms. Globally stock were down -1.4%,
US equities down -1.5% and UK equities fell -1.2%. The best
performing sectors globally were Healthcare, Financials and
IT, which rose on better than expected earnings reports, while
Energy stocks and Consumer Staples lagged. The Federal
Reserve lowered the funds rate target range, as widely
expected, by 25bps. The target range is now 1.5%-1.75%
following the October meeting, after the third rate cut so
far this year, amid muted inflation pressures and concerns
about the economic outlook. At the same time the central
bank signalled a pause in the easing cycle, as the previous
reference that it “will act as appropriate” to sustain the
economic expansion was removed from the policy statement.
Gold closed the month above the $1500 an ounce mark as
central banks continue to adopt a dovish stance.

To the surprise of markets, Prime Minister Boris Johnson
was able to agree a new Brexit deal with the European Union
(EU). This was made possible after Johnson agreed to put a
customs border in the Irish Sea and for Northern Ireland to
remain more closely tied to the EU than Great Britain, thus
avoiding the need for a hard border on the island of Ireland.
The new deal gained more support in the House of Commons;
however, MPs refused to approve rushing through the
legislation process in order to leave the EU on the 31 October
deadline. This meant an extension to the departure deadline
was agreed to 31 January 2019. A general election will now
be held on 12 December, as the prime minister seeks a new
parliamentary majority to pass his deal.