Concerns over slowing global growth persisted, especially in Europe and China. The IMF's global economic outlook revisions in early October indicated slightly lower-than-expected growth for 2024, citing high inflation and tight monetary conditions in advanced economies. Inflation remained a key issue for central banks, with most focusing on reining in persistent price rises.
Inflationary pressures remained strong, with consumer prices rising by 0.4% in September 2024, slightly above expectations. The Federal Reserve's recent moves kept interest rates steady but signaled continued tightening if inflation did not show further signs of cooling. Employment data, particularly non-farm payrolls, remained strong, keeping fears of a potential recession in check.
The eurozone struggled with sluggish growth and sticky inflation, with the European Central Bank (ECB) opting for a more dovish stance by mid-October. Germany, Europe's largest economy, faced near-stagnation, while inflation across the bloc continued to erode consumer spending.
China's economic recovery faltered despite government efforts to stimulate growth. Data released in September showed sluggish consumer demand and continued problems in the real estate sector. The People's Bank of China (PBOC) cut reserve requirements to boost liquidity, yet consumer confidence and private investment remained subdued.
The Federal Reserve kept interest rates steady at the September 2024 FOMC meeting, maintaining the benchmark rate between 5.25% and 5.50%. However, Fed Chair Jerome Powell indicated that inflation remained a concern and future rate hikes were still on the table. Market expectations fluctuated as hawkish Fed rhetoric was countered by softening economic data.
By mid-October, the ECB signaled a potential pause in rate hikes after a year of aggressive tightening. The ECB held its policy rate at 4.5%, the highest level in over a decade, citing weakening economic indicators, particularly in Germany, Italy, and France.
In response to deteriorating business sentiment, some EU members began advocating for renewed fiscal stimulus, though the debt burden and political challenges across the bloc made coordinated action difficult.
To counter weak domestic demand and falling property prices, the PBOC introduced more accommodative policies, including a 25 basis point cut in its reserve requirement ratio. Despite this, credit demand remained low as households and businesses adopted a cautious approach.
The US stock market experienced heightened volatility amid a mix of strong corporate earnings reports and economic uncertainty. The S&P 500 fell by 2.5% during the first half of October, driven by concerns over inflation, rising bond yields, and global economic headwinds.
Tech stocks, which had surged earlier in the year, faced a pullback as higher interest rates made their valuations less attractive. Major tech firms such as Apple and Google saw share price declines of around 3-5% during the period.
Energy stocks performed well, with oil prices rallying above $90 per barrel in early October. ExxonMobil, Chevron, and other oil majors reported strong earnings, benefiting from higher crude prices.
European stocks underperformed their US counterparts, with the STOXX 600 declining by 3.8% over the period. The banking and industrial sectors led the decline, driven by weak economic data from the eurozone and concerns over stagflation.
Asian markets experienced mixed results. Japan's Nikkei 225 saw a modest 1.2% decline, as economic data showed slowing growth but improving inflation. Meanwhile, Chinese equities were volatile as concerns over the property sector continued to weigh on investor sentiment.
Oil prices saw a notable increase during the period, largely due to OPEC+ production cuts and geopolitical tensions in the Middle East. Brent crude rose above $90 per barrel by early October, while WTI crude reached around $88 per barrel. Supply constraints continued to be a primary driver of price gains, as did rising global demand ahead of the winter season.
Economic growth is expected to moderate in the final quarter of 2024, as high interest rates and inflation weigh on consumer spending and business investment. However, a resilient labor market may provide some support for growth.
The period was marked by heightened market volatility, driven by inflationary pressures, central bank policies, and global growth concerns. Equity markets faced headwinds, particularly in Europe and Asia, while commodity prices, especially oil, rose on supply concerns. As we head into the final quarter of 2024, economic uncertainty remains high, with central bank actions and geopolitical developments likely to play pivotal roles in shaping market movements.