The Dollar continued to track higher in October, while US equities still retreat – Month in Review: October 2023
Macroeconomic Environment Review
The FX and US equities markets continued to be volatile in October. The US Dollar strengthened against most major currencies, while US equities markets declined further. These moves were driven by several factors, including rising US interest rates, a strong US dollar, and global economic uncertainty.
More specifically, the US Dollar Index rose 1.36% over the month. Continued rising US interest rates provided the push for this move as the US Federal Reserve raised interest rates by 0.75 percentage points in October, the sixth increase so far this year, making US assets more attractive to investors, as they offered higher yields. Additionally, strong US economic data, as the US economy added 260,000 jobs in October, which was above expectations also added fuel to the move. As the unemployment rate remained unchanged at 3.7%, this strong economic data reinforced the view that the Fed will continue to raise interest rates aggressively in the coming months. And as it is the usual backdrop, the persisting global economic weakness, attributed to the ongoing war in Ukraine, rising inflation, and a slowdown in economic growth in China, led investors to seek safety in the USD, which is seen as a safe-haven currency.
On the other hand, the US equities markets declined further in October, with the S&P 500 index falling by 2.20%. The Dow Jones Industrial Average fell by 1.36%, and the Nasdaq Composite index fell by 3.84%. The decline in US equities was driven by a number of factors, including the rising interest rates, as the Fed’s continued interest rate hikes raised concerns about a potential recession. Higher interest rates also make it more expensive for companies to borrow money, which can weigh on profits. Furthermore, the strong US dollar continued to hurt the earnings of US companies that generate a significant portion of their revenue overseas. And finally, the same global factors that supported the USD and weighed on US equities in September continued to do so in October. Investors were concerned about a potential slowdown in the global economy and the impact of rising inflation on corporate profits. Despite the decline in October, US equities markets are still up over the year. The S&P 500 index is up by 9.23% year-to-date, the Dow Jones Industrial Average is up by 0.28%, and the Nasdaq Composite index is up by 23.59%.
Monthly Performance Review
During the month of October 2023, AENAON Syncro Strategies generated the following total returns net of fees:
Across the spectrum of our benchmark indices, our strategies’ performance during October was rather positive. As a comparison, the US S&P 500 equities index dropped by 2.20%, the Barclay Hedge Fund Index posted a 1.58% decline, the Barclay CTA Index lost 0.51% while the other benchmark indices can be seen on the chart below.
Chart 1: Monthly Performance vs. Benchmark Indices – October 2023
Charts 2, 3 and 4: Inception-to-Date Performance vs. Benchmark Indices
You can always review our updated factsheets at the following Fundpeak links, with monthly performance updates and statistics since inception:
