Equities Struggle To See Weekly Gains

? Equities continue to record weekly gains, but markets are more volatile

? S&P500 adds 8.3% in October, concluding best month since 2011

? Nikkei 225 adds 9.75% in October, concluding best month since April 2013

? EUR/USD lowest since August as Fed turns more hawkish

Markets have concluded yet another turbulent, yet overall positive, week. The S&P 500 (SPY) recorded a 0.2% weekly increase, making this the fifth consecutive week at which the index ends in positive territory. The weekly upward nudge also aided the index in securing a 8.3% gain in October, making this the best month for the index since October 2011. The weekly path over there, on the other hand, may have not been as stable, visiting substantially better, and worse, marks compared to the previous Friday’s close. In Europe, the DAX scored a 0.5% weekly gain, to 10,850 points. Similar to the U.S., the German stock index went to 10,691 points on Tuesday and 10,887 on Thursday. The Nikkei 225 is up 1.4% for the week, which means a very solid 9.75% gain for October as a whole, which is the best for the index since April 2013. It should be noted that in spite of the evident struggle by major indices to see weekly gains, their lackluster performance still hasn’t translated to the VIX index, which added a mere 0.61 point during the week, the a rather common level of 15.07.

Trades predicting the USD to gain are also proving more lucrative. The Greenback strengthened 0.1% vs. the Euro on a weekly perspective. This time, strengthening of the USD was mostly due to the Fed’s rate announcement, Wednesday (see below). Subsequently, On Tuesday, EUR/USD went to as low as 1.0897, which is the lowest for the currency pair since August, though much of this faded during the rest of the week, concluding at 1.1006.

Fed takes the road less traveled

The Fed wasn’t really expected to raise rates in last week’s decision. In fact, the probability for a rate hike derived from the markets was estimated at merely 4% ahead of the decision. With that given, it was much easier for the Fed to outline a hawkish stance, putting a December rate hike back on the table, even while refraining from an actual hike. The Fed’s rosy view of global economy included removing a comment by which global developments may restrain growth, saying, alternatively, that “the U.S. economy has been expanding at a moderate pace“. Reference to December’s decision positioned it as quite important, when the Fed changed its outlook from “determining how long to maintain this target range” to “determining whether it will be appropriate to raise the target range at its next meeting“.