Two key issues dominated October. The first was the resurgence of COVID-19 in Europe, which led to widespread restrictions across several countries. The second was the lead-up to the US presidential election, which was held on 3 November. In response to the uncertainty surrounding these issues, investors were cautious which led to broad declines across sharemarkets.

US shares fell 2.6% as COVID-19 cases continued to increase in most states, compounded by uncertainty surrounding the outcome of the US presidential election (at the time).

Eurozone shares also fell across the board as several countries reintroduced lockdown measures to contain rising infection rates. The European Central Bank kept monetary policy unchanged but indicated that additional stimulus measures will likely be announced in December. In the UK, shares also fell as the government introduced nation-wide restrictions across England.

In Australia, a supportive Federal Budget, the easing of COVID-19 restrictions and the gradual re-opening of Victoria saw the sharemarket (S&P/ASX 300) rise by  1.9%, with investor sentiment generally more optimistic than in the US, UK and Eurozone. This was despite 29,500 jobs being lost during September, slightly increasing the unemployment rate from 6.8% to 6.9%.

The Australian Dollar depreciated against the major currencies, including the US Dollar and the Japanese Yen, falling 2.0% and 2.9% respectively. Bond yields were mixed over the month, falling across Europe but generally rising elsewhere. The US 10-year yield rose 0.17% and the Australian 10-year yield rose 0.04%.

Note: For a review of the financial year to 30 June 2020, click here.

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