October descended into relative turmoil from a financial market perspective as global growth fears, geopolitical unrest and investor discontent with the world’s central banks caused dramatic drops amid heightened volatility. This lasted for the entirety of the first half of the month, only to reverse in the latter half as central banks submitted to market will and issued calming statements of ‘lower for longer’ in the US and a reiteration of ‘whatever it takes’ in Europe. As the US Federal Reserve officially finished its monetary stimulus measures, the quantitative easing panacea continued with the Bank of Japan picking up the liquidity baton at the end of the month, announcing a surprise increase in its own money printing programme and boosting asset purchases to around 80 trillion Yen ($704 billion).
Back in July, the S&P 500 had gone 62 consecutive trading days without posting a 1% move in either direction; its longest streak since 1995. In October, the index closed up or down over 1% on 12 of the 23 trading days in the period. The index had its second best day of the year on the 8th of the month (+1.75%) after the FOMC minutes, followed by its worst day since April, losing -2.07%. The VIX, a measure of implied volatility and also known as Wall Street’s ‘Fear Gauge’, rose dramatically by almost +90% to peak at 31.06; a reading not seen since November 2011.