• The FTSE All Share delivered a positive return of 7.9% over the month bouncing back from weak performance of the third quarter as global events again took centre stage.
• News that RPI rose to 5.6% was shrugged off by the market and the Bank of England.
• As expected, the Bank of England announced a further round of Quantitative Easing, pledging to purchase another £75 billion of UK Government Bonds over the following four months.
• After September’s outperformance by the defensive sectors, more cyclical sectors performed well in October.

• US economic data appeared to show the country is moving away from recession as the pace of growth accelerated faster than expected in the 3rd quarter of 2011. 
• The quarterly earnings season produced a round of solid corporate profit reports further helping sentiment.
• GDP figures and encouraging US corporate results were enough to tempt investors back in to the Stock Market and steer them away from perceived safe haven assets.
• In terms of sector performance, energy, financials and industrials all fuelled the rise while consumer staples, healthcare and utilities recorded only modest gains.

• European equity markets enjoyed a strong bounce at the beginning of October in the anticipation that Europe’s leaders would solve the Eurozone crisis at the summit meeting held at the end of the month.
• The crisis summit persuaded private sector holders of Greek debt to take a 50% write down. It also forced Europe’s banks to raise another 10 billion Euros of capital and the bailout fund will increase from 440 billion Euros to 1 trillion Euros.
• The last day of the month delivered the unwelcome news that the Greek Prime Minister wanted to subject the country’s newly agreed bailout plan to a referendum which caused markets to weaken.

• Asian equities rebounded strongly in October recovering some of their recent losses.  A number of factors combined to help improve investor sentiment including progress towards a resolution of the Eurozone Sovereign Debt Crisis, positive US data and better news from China.
• Chinese inflation fell to 5.5% in October, a downward trend that may continue given falling food prices.
• China led the gains with industrials, materials and the financial sector generating strong returns. Initial estimates showed that China’s third quarter GDP grew 9.1% year on year which, while less than expected, is still impressive.
• However there were signs of fading growth elsewhere in the region, with Taiwan’s third year GDP growth of 3.5% lower than expected, while export growth in Korea hit a two year low.
• Inflation in India remained high with the Reserve Bank of India raising its benchmark lending rate for the 13th time since March 2010. However, manufacturing and export data for October showed a significant improvement.
• In Australia the Reserve Bank cut interest rates in response to lower inflation, although the move was also seen as supportive to a domestic economy in which confidence is low outside the resources sector.

• Japanese equity markets generated small positive returns over the month, underperforming their more volatile peers.  Although recent external market headwinds subsided, the yen remained stubbornly strong, even as the US Dollar strengthened against other currencies.  This led to the Bank of Japan to intervene in currency markets for the third time this year; a move welcomed by large Japanese exporters.
• There was an improvement in the unemployment rate which fell to 4.1% in September from 4.3% in August with post earthquake reconstruction demand fuelling job creation in the construction, services, healthcare and welfare services.

• High yield outperformed investment grade and Government Bonds during October.
• Core Government Bonds prices fell during the month as risk assets outperformed and economic data in China and US were better than expected.
• This shift in sentiment resulted in a sharp change in asset class performance compared to September. Credit spreads narrowed as corporate bonds outperformed core government bonds.

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Conclusion