S&P 500 sell-off overshoots fundamentals

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Equity market monthly review

• After a volatile month, the S&P 500 gave in most of its gains year to date, losing 6.5% from its September peak. Global equities lost 6.4% over the month, with continued rotation in styles from growth to value and from cyclicals to defensives.
• Although reported profits look intact in the US, there have been concerns around corporate guidance and some big headline misses, although it doesn't appear meaningful enough to rationalize the price action. We believe the selloff was driven by a variety of perceived macro risks, while the extent of the sell-off appears to be related to technical factors.
• We remain overweight global equities in our cross asset allocation as the fundamental backdrop is still supportive and maintain our preference for US equities given the earnings backdrop underpinned by robust corporate activity