What moved the markets in October: Central bank policy and the North American Free Trade Agreement dominated the headlines in October. The Bank of Canada kept its overnight interest rate unchanged at 1% and the central bank’s more cautious messaging and softening economic data helped push bond yields and the Canadian dollar lower.

 

Market highlights:

South of the border, speculation surrounded who President Donald Trump would nominate to succeed Chair Janet Yellen

 

The European Central Bank announced their decision to extend their asset purchase program

 

Catalonia declared its independence from Spain and both the Japanese Prime Minister Shinzo Abe and Chinese President Xi Jinping secured their next term in power

 

Equity markets were positive in North America. The S&P/TSX moved up 2.7%, largely driven by the Financial sector

 

In the U.S., the S&P 500 closed up 2.3%, with most sectors ending the month in positive territory. The Information Technology sector led the U.S. markets with a strong 7.8% rally

 

What to expect going forward: The market indexes continue to hold within the long-and short-term uptrends that have been in place for the past several years. It is important to realize that the movement in the stock market may not be directly tied to what is happening in the world outside the business cycle. Over the past several years, the news has been quite concerning on a domestic and international scale, yet the stock market has continued to advance since 2009 at a rate that is about double the long-term average. Earnings and economic growth drive stocks, and the anemic rate at which this growth has occurred in recent years may be better for stocks than the boom-cycle that many seem to want. The major indexes are now near the high end of their rising trends, which we believe makes a pullback possible and even likely, but the overall trend continues to favor a stock-holding strategy for higher levels later.