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Stocks recover this week in many developed markets.

Week in review: Back on track?

This week: Stock markets recover, U.S. healthcare companies show robust signs and UK pay is up.

Stock markets in developed countries mounted a recovery in the first three days of this week. Strong U.S. company profits played a major part in helping to recover the slump from the first half of October.

Tuesday was the S&P 500’s best day since March. Robust results put wind in its sails.

But just as investors thought that things might be looking up, the market lurched down again on Thursday.

The falls at the end of the week weren’t quite enough to erase the earlier gains. By Thursday’s close, the S&P 500 was up 0.1%. In the UK, the FTSE 100 gained 0.4%. Meanwhile, the FTSE World Europe (ex UK) index rose by 0.8%. Most markets remain substantially down for the month to date.

Good health?

In the U.S., there were some striking performances from healthcare stocks. Companies such as Johnson & Johnson and United Health beat expectations in their third-quarter results.

The U.S. healthcare sector’s recent performance has been helped by the perception that profits are more secure. People will always get ill whatever state the economy is in.

Fears that the U.S. economy’s rapid growth may soon be curtailed by higher interest rates have made such companies more attractive to investors.

Netflix flickers into life

Netflix staged a particularly sharp revival despite recent selling in the technology sector. On Tuesday, the video-streaming company announced third-quarter profits that comfortably outstripped analysts’ expectations.

Netflix added almost 7 million net subscribers over the quarter. This was well ahead of the 5.3 million forecast by most analysts.

Its shares performed a double-digit leap as investors responded to the news.

Pay perks up

In the UK, wages were reported to have grown at their fastest pace since the global financial crisis. For the three months to the end of August, wage growth came in at 3.1%, according to the Office for National Statistics.

Expectations were for 2.9%, so this was a significant positive surprise. The pound strengthened on the news, although this initially constrained the FTSE 100’s participation in the developed-market rally.

A stronger pound reduces the overseas earning power of many large London-listed firms.

But as so often recently, the pound fell back after the Brexit talks reached a fresh impasse. The UK and the European Union (EU) have been struggling to find a way forward on the Irish border question, putting the prospect of an exit deal at risk.

Meanwhile, British Prime Minister Theresa May faces growing criticism at home for her handling of the negotiations.

In particular, her suggestion that a longer transition period could be adopted met widespread hostility among politicians from all sides.

Elf warning

A notable faller in the mid-cap FTSE 250 index was Games Workshop, the Nottingham-based producer of plastic elves, orcs and space marines. The share price of the miniatures manufacturer fell sharply on Thursday after the company warned of “uncertainties” ahead. This prompted some investors to take profits in shares that have risen more than 600% since 2016.

Brazil beats the blues

While developed markets were still in the black by Thursday’s close, emerging markets had a much rougher week. In China, the Shanghai Stock Exchange lost almost 4.7%, extending its 2018 slide.

The Shanghai A-share index has now fallen 25% since the start of the year. Investors are concerned about China’s slowing economy, the effects of the trade war with the U.S. and the amount of debt that the country’s local governments have built up in recent years.

Many other emerging markets were also weak, but Brazil bucked the trend.

The Bovespa was up 1.1% by Thursday’s close, propelled by hopes that Jair Bolsonsaro, the right-wing candidate, will win the final round of the presidential election on October 28.

Although Bolsonaro is a controversial figure, his economic policies are seen as market-friendly.

And finally…

Overrun by Angles, captured by Vikings and harried by Normans, the city of York is no stranger to looting and pillage. But it seems that there’s one group of invaders that are too much even for this battle-hardened city.

Stag and hen parties have been testing the limits of local tolerance, and their drink-fuelled antics have already led to a ban on inappropriate inflatables in various city pubs and the prohibition of booze on York-bound trains.

The latest clampdown concerns singing. The buskers of York have been forbidden from allowing stag and hen parties access to their microphones. This follows complaints about the caterwauling that too often follows a tanked-up takeover.

To combat the marital marauders, buskers are to be equipped with a laminated card to brandish in the face of any persistent would-be vocalists.

One suspects that York’s Viking rulers would have got the message across more directly.

Important Information

Foreign securities are more volatile, harder to price and less liquid than U.S. securities. They are subject to different accounting and regulatory standards, and political and economic risks. These risks are enhanced in emerging markets countries.

Indexes are unmanaged and have been provided for comparison purposes only. No fees or expenses are reflected. You cannot invest directly in an index.

Companies mentioned for illustrative purposes only and should not be taken as a recommendation to buy or sell any security. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities in this list.

ID: US-191018-75093-1