Global Indices Monthly Outlook – October 2017

The stock markets around the world regained their mojo over the last month after a period of holidays in some parts of the world. The volatility was back in the stock markets but the markets were under pressure almost all through the month for a variety of reasons depending on which part of the world you were. But looking ahead, we believe that we are in for a bullish phase in the stock markets around the world and the traders should get ready to take full advantage of that.

US Stock Indexes Continue Higher

The US stock indexes continued to trade in a very strong manner and ended the month of September near their highs. Of course, there were periods of correction especially when North Korea raised their ante and the US joined issue with them. This led to rise in global risk and led to corrections in the stock markets in the US. The world may think differently about Trump but the stock markets seem to love him and his policies as the US stock indexes continued to move higher in the hope of corporate tax cuts from him in his tax reform bill which he is trying to push through.

Looking ahead, we are having a strong start to the month with the US stock indexes making all time highs on a daily basis and as we have been saying in our daily forecasts, we believe that we are in a period of long term bull market as far as the stocks are concerned. The US has already raised rates and are looking to raise rates even more in the coming months and this is likely to keep the markets buoyed. With Trump also looking to adopt a corporate friendly stance as far as taxes are concerned, we expect a lot of funds to flow into the stock markets as the US economy gathers pace. This is likely to keep leading the US stock indexes higher.

Euro Stock Indexes Mixed

The European stock markets were not so lucky in September as the news of tapering of the QE by the ECB continued to haunt the markets. The DAX was also weighed down by the German elections that happened on September 24 and a combination of these events served to keep the major stock indexes in Europe under pressure for most of the month. The tapering talk is unlikely to die down anytime soon but we believe that the tapering would be done in a very slow and steady manner so that the markets are not affected too much in the medium term.

With this in mind, we expect a bullish month in October for the European stock indexes. The DAX now has the German elections out of the way and though Merkel did not get enough majority to form a government of her own, it seems only a matter of time before that political impasse is sorted out and she is back at the helm. We are also seeing increasing signs of economic cooperation between France and Germany which augurs well for both the countries. Considering all these developments and also considering the fact that the global stock indexes are likely to go into a strong bullish cycle in the long term, we expect the stock markets in Europe to join the bull run and move higher during the month of October.

Asian Markets Affected by North Korea

Asian stock markets were the most affected by the tension and uncertainty in the Korean region. Any flare up of tension in the Korean region does not only affect North and South Korea but it also affects Japan as well and thats why we saw the Asian stock markets trade in a subdued manner during the first half of the month. Towards the end of the month, the risk factor picked up around the world and this helped the stock markets to move higher and close the month near to their highs. This also augurs well for most of the major stock indexes in Asia.

Like the rest of the world, we expect the Asian stock indexes to trade in a strong manner in the coming days. The global bull cycle that we expect in the stock markets is also likely to keep the traders busy though the threat from North Korea is also likely to hang on to the necks of the stock indexes in Asia and likely to keep them under pressure in the short and medium term. Traders would be well advised to wait for strong regions of support in the stock indexes and go long on them.