1. China steps up: Chinese policymakers have announced a slew of stimulus measures targeted at reversing the downturn in economic growth and deflationary forces in the economy. Similar to the end of Covid-19 lockdowns in 2022, the policy change is sudden and dramatic. Reasons for the change in policy direction are being hotly debated. One potential factor was the start of the US Federal Reserve’s (Fed’s) interest-rate-cutting cycle, which has put downward pressure on the US dollar, which fell 4% in the third quarter. The weaker dollar has taken some pressure off the dollar-renminbi spot rate, which Chinese policymakers did not want to see weaken excessively. 

2. Middle East tensions rise: The Middle East conflict has escalated, with Israel conducting multi-front offensives. Despite these developments, a full-scale war between Israel and Iran remains a low probability event the short term. The escalating tensions have impacted the regions asset markets and global oil markets. This region accounts for 40% of the world’s seaborne oil trade. We remain watchful of the situation and managing risk associated to our investment exposure to the region.

3. Equities in the emerging Latin American region advance. Mexican equities slid after a controversial judicial reform was signed into law. Brazil’s central bank started raising interest rates to control inflationary environment amid stronger-than-expected economic activity. This move marks a contrast with most other global central banks, which have begun to ease rates.

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