Good-bye cathartic October

What a difference one month can make. At the end of September, one of the biggest conundrums of 2018 was the divergence of stock market returns between the US (strongly positive) and the rest of the world (flat). October’s stock market correction brought falls of similar magnitude to all markets, but clearly originated in the US, before contagion spread around the world. Initially, it was caused by concerns that rising US bond yields would diminish stock returns, as higher costs of finance eat into corporate profit margins and geared share investments on the back of cheap credit becoming less attractive.