Dovish Drift Lifts Global Markets: Your October Update

Global equities extended 2024’s gains. U.S. markets led, with the NASDAQ 100 up more than 40% from April lows and the S&P 500 advancing around 4% in September. 

The pivot came as Chair Jerome Powell flagged a weakening U.S. labour market at Jackson Hole, encouraging markets to price further rate cuts. 

Small caps, most sensitive to funding costs, benefited, while large-cap tech resumed its uptrend after an August pause. A softer dollar supported non-U.S. assets and cross-border flows. 

• China: Chinese tech shares have bounced back strongly. One big tech index jumped about 12% in September and almost 50% so far this year. That’s partly because the mood from policymakers has improved, the US and China are talking again, and Chinese AI names like Alibaba, Tencent and Baidu are picking up speed. Prices had been behind US tech, so there was room to catch up. 

• Japan: We still like Japan. Inflation is modest (around 2.5-3%), wages are rising, and companies are being reformed. The government also looks set to support growth, which is good for shares, even if politics is a bit noisy. 

• Europe: Things are calmer but moving the right way. Germany’s plans to spend more on infrastructure and defence have lifted confidence, and investors expect the European Central Bank to cut interest rates by about 0.75 percentage points by mid-2026, which would also help markets. 

AI and the computer chips that power it are still core. Nvidia is the key supplier building the “plumbing” for AI, but prices across the sector are high, so investors now want to see solid profits to justify all the heavy spending. 

Cheaper options, including new AI models coming out of China, could nudge costs down over time. 

Aditum owns broad-based funds covering chipmakers, big US tech and the NASDAQ 100, plus a selective slice of Chinese tech. After strong gains, the firm has trimmed some positions to bank profits and manage risk. 

Gold and gold-mining shares help diversify the portfolio and act as a buffer when geopolitics flare up or inflation rises. That said, gold has moved very quickly at times, so Aditum sizes these positions carefully and adjust as needed. 

Bonds went up because recent jobs data looked softer and the U.S. central bank cut interest rates by a quarter of a percent, while saying it’s trying to balance growth worries with inflation. Longer-dated corporate bonds benefited the most. 

Investors are keen to own company debt right now, so the extra yield they demand over government bonds is quite small. Where borrowing costs go next will depend on how inflation evolves, how governments handle budgets and debt, and who runs the Fed. 

Aditum’s stance is positive but careful. It is keeping exposure to shares and high-quality bonds, actively managing interest-rate sensitivity, and trimming areas that look over-stretched. 

Into year-end, it is moderately bullish but ready for bumps. The plan is to stick with durable growth themes, such as AI, strong global equities and longer-maturity credit), to take profits after big runs, and lean into markets with supportive reforms and policy (especially Japan, and selectively Europe and Chinese tech). 

With plenty of cash still in the system and policy turning easier, pullbacks are expected as buying opportunities – while strict risk management helps protect this year’s gains.