26th October 2026

U.S.

Stock Market Performance:

• U.S. markets finished mixed as concerns about AI investment and financing weighed on technology shares, while small-cap and value stocks outperformed.

• The Russell 2000 gained 2.00% and the Dow rose 0.41%, while the Nasdaq fell 0.71% and the S&P 500 declined 0.47%.

• Oil prices rose amid renewed Middle East tensions, reversing earlier losses linked to optimism over U.S.-Iran diplomacy.

AI spending concerns weigh on technology stocks:

• Technology shares initially recovered on optimism about data centre demand and earnings, but fell later in the week as investors questioned the scale, financing and potential returns of AI investment.

• Meta Platforms declined amid scrutiny of its substantial capital expenditure plans, while semiconductor shares remained volatile.

Housing market weakens amid elevated mortgage rates:

• The National Association of Home Builders' index fell three points to 29 in October, its lowest since 2012, reflecting high mortgage rates and rising construction costs.

• Pending home sales plunged 7.3% in September to their lowest level since records began in 2001, while housing starts also weakened.

• Initial jobless claims fell to 194,000, their lowest since July, although continuing claims rose by 25,000 to 1.728 million.

Business activity remains strong despite inflation pressures:

• The S&P Global Composite PMI eased to 57.6 in October from 58.4, indicating continued expansion, although selling prices rose at their fastest pace since August 2022.

• Consumer sentiment remained weak at 48, approximately 10% below its year-earlier level. One-year inflation expectations rose to 4.7%, while longer-term expectations increased to 3.5%.

Treasuries rally as investors seek safer assets:

• Treasury yields fell as technology weakness and geopolitical uncertainty increased demand for government bonds.

• The 10-year Treasury yield dropped below 5% for the first time in around a month, ending Friday at approximately 4.99%.

Europe

Stock Market Performance:

• The STOXX Europe 600 fell 1.39% amid higher oil prices, Middle East tensions, inflation concerns and political uncertainty.

• Germany's DAX declined 1.72%, France's CAC 40 fell 2.19%, Italy's FTSE MIB lost 2.60%, and the UK's FTSE 100 dropped 1.76%.

French unrest and fiscal concerns unsettle markets:

• Cost-of-living protests escalated into riots and looting, weakening French equities and pushing 10-year government bond yields above 5%.

• The yield spread over German bonds reached its widest since 2012, reflecting concerns about France's fiscal position and political stability.

Corporate earnings remain mixed:

• Energy companies reported strong profits and positive trading updates, while some luxury goods businesses disappointed.

• Semiconductor results were generally solid, although shares remained volatile amid concerns about AI investment and technology valuations.

Eurozone growth slows as inflation expectations rise:

• The Eurozone Composite PMI fell to 51.9 in October from 53.1, below expectations of 52.7, indicating slower economic expansion.

• Household inflation expectations rose to 3.1% for the coming year from 3.0%, adding to concerns about persistent price pressures.

UK inflation strengthens interest rate expectations:

• Unemployment unexpectedly fell to 4.7% in August from 4.9%, while annual inflation rose to 3.5% in September, its highest since October last year.

• Higher fuel prices contributed to inflation, strengthening expectations of a possible Bank of England rate increase on 5 November.

• Consumer confidence fell sharply to -24 in October from -13, its largest monthly decline since the pandemic, amid higher living and borrowing costs and uncertainty over the forthcoming Budget.

Japan

Stock Market Performance:

·       The Nikkei 225 fell 4.03% and the TOPIX declined 2.46% as concerns about AI investment, global technology weakness, higher oil prices and Middle East tensions weighed on sentiment.

Government bonds rally as investors seek safety:

• The 10-year Japanese government bond yield fell to 2.78% from 2.94% as investors moved towards safer assets. Demand at a 20-year bond auction reached a record.

• Core inflation rose to 2.1% in September from 1.7%, exceeding the Bank of Japan's 2% target for the first time since December 2025. Despite expectations of further rate rises, the central bank was reportedly leaning towards holding rates steady at its 29–30 October meeting.

Yen strengthens as the dollar weakens:

·       The yen appreciated to around JPY 156.7 per U.S. dollar from JPY 157.9, supported by risk aversion and falling U.S. Treasury yields.

Trade growth moderates:

• Exports rose 16.7% year on year in September, down from 19.3% in August and below expectations of 21.3%, although semiconductor-related products and automobiles remained supportive.

• Imports increased 18.9%, slowing from 28.0% in August and falling short of the 20.4% forecast.

China

Stock Market Performance:

• The CSI 300 fell 1.57%, the Shanghai Composite declined 0.69%, and Hong Kong's Hang Seng Index dropped 4.52% as AI-related concerns and global technology weakness weighed on shares.

• A Friday rebound recovered some losses, although Hong Kong technology and biotechnology shares remained under pressure. Mainland bank shares were more resilient.

GDP improves, but domestic demand remains weak:

• GDP growth accelerated to 4.5% year on year in the third quarter from 4.3%, exceeding the 4.4% forecast.

• September industrial production rose 5.5%, but retail sales increased just 1.1%. Fixed asset investment fell 7.2% over the first nine months.

• Growth reached 4.6% in the first three quarters, keeping the annual target of 4.5%–5.0% within reach, although weak consumption and investment highlight an uneven recovery.

PBoC considers changing its policy benchmark:

• The central bank is studying whether to replace the seven-day rate with the overnight reverse repurchase rate as its main policy benchmark.

• One-year and five-year loan prime rates remained unchanged at 3.00% and 3.50%, respectively.

Regulator strengthens scrutiny of online platforms:

• Regulators raised concerns about counterfeit goods, misleading advertising and product descriptions at major online platforms, particularly in livestream commerce and instant retail.

• Hong Kong-listed e-commerce shares fell following the announcement and a broader technology sell-off. No new enforcement measures were specified.

U.S. proposes broader investment restrictions:

• Proposed U.S. Treasury rules would expand restrictions on certain investments in sensitive technologies in countries of concern, including China, covering specified biotechnology activities alongside AI and advanced semiconductors.

• Hong Kong-listed biotechnology shares fell, although the proposals remain subject to consultation and have not taken effect.

Other Key Markets

Indonesia:

• Indonesian equities recovered some previous losses after MSCI warned it could downgrade the country from emerging-market to standalone-market status over concerns about transparency, ownership structures and trading practices.

• The warning pressured the rupiah and government bonds amid fears of foreign capital outflows. Sentiment improved after exchange officials outlined transparency measures and sovereign wealth fund Danantara disclosed share purchases.

• Bank Indonesia held its benchmark rate at 5.75% for a fourth consecutive meeting but raised its overnight deposit facility rate by 25 basis points to 5.00%.

• Plans to reduce banks' reserve requirements and strengthen currency-hedging incentives aimed to support lending, attract foreign investment and stabilise the rupiah.

Hungary:

• The government proposed reducing the budget deficit to 4.9% of GDP in 2027 from an estimated 7.5% in 2026, with a target below 3% by 2030.

• Measures include spending cuts, tax changes and reversing some previous commitments, while increasing selected social benefits and public-sector wages.

• The government also aims to adopt the euro by 2032, subject to meeting the required economic and fiscal criteria.

• The National Bank of Hungary maintained its benchmark rate at 5.50%, extending its pause following three consecutive summer rate cuts.

• Inflation edged up to 1.6% in September from 1.3% in August but remained below the central bank's target range.

• Credible fiscal consolidation could reduce Hungary's risk premium, support the forint and create scope for future rate cuts.

PLEASE NOTE:

This content is for informational purposes only and should not be construed as investment advice or a specific recommendation to act on any investment. It is importnat to assess your own circumstances before making investment decisions. The views expressed are as of the date indicated and whilst we believe the information is from reliable sources, we do not guarantee it’s accuracy. Past performance is not indicative of future results, and all investments carry market risks, including the potential loss of the principal.