cudda fooled me The rush back to “risk-on” continued during the week ending October 31 for most of the world’s stock market indices. US indices gained from +2.7% to +4.9%, and the SmallCap Russell 2000 regained positive territory for the year to date. The Dow and S&P 500 finished the week in record territory, after kissing “correction” territory just two weeks earlier. Canada’s gains were much more muted, at just +0.5% for the week for the TSX index. Earlier in the year, Canada’s market gains had far surpassed those in the US, but that lead has vanished and Canada is now trailing the US in year to date gains. Developed International and Emerging International both rose by +2.8% for the week, with Japan and Brazil leading the way with gains of +7.1% and +4.0%, respectively.
The rapidity with which fear left the market in the second half of October was dramatic and record-setting. Three consecutive days of 10% declines in the VIX Volatility Index. Commonly referred to as the “Fear Index”, VIX is a trademarked ticker symbol for the Chicago Board Options Exchange Market Volatility Index; it represents one measure of the market's expectation of stock market volatility over the next 30 day period. The VIX dropped 48% between the 16th and the 31st which was the most rapid drop in the VIX Fear Index since March of 2009.
For the month of October, the gains in the final week of the month turned a loser into a winner for US indices and many International indices. However, Canada and Developed International still were negative for October, with Canada turning in the worst performance at -2.3%. The fact that gold finished the week at the lowest weekly level in four and a half years did not help Canada, whose market is more sensitive to the price of gold than is any other developed nation’s market.