Monthly Review - October 2026
In brief
The markets
-0.9%
0.1%
-3.6%
-2.2%
2.5%
-4.0%
1.2%
4.2%
-3.5%
Source: Bloomberg 30.10.2026, returns in local currency
Top stories
Another rollercoaster ride
Fortunes were mixed in financial markets. Bond yields rose sharply, as prices fell, on fears over rising inflation and mounting government debt. Government bond yields in the US and France topped 5%, a level not seen for more than 20 years. Meanwhile in equity markets, concerns over soaring artificial intelligence capital expenditure rattled the tech sector, and data centre infrastructure stocks suffered. Government bonds then rallied hard, resuming their traditional safe haven status. Elsewhere, Beijing again supported Chinese equity markets after they slipped into bear market territory, while the S&P 500 hit a record high.
Inflating rate hike expectations
Geopolitical tensions again spurred global commodity prices upwards, and oil touched levels not seen since May. US inflation reports came in higher than expected for September, although Federal Reserve chair Kevin Warsh claimed this left his views on the economy unchanged. Major central banks left rates on hold at their October meetings, and market predictions for the timing of future interest rate hikes were pushed back. Some surveys priced the chance of a Fed rate hike in December as high as 100%, with two further hikes to follow in 2027.
A new tech IPO record?
Undaunted by tech sector turbulence, AI lab Anthropic launched its initial public offering. No valuation was revealed, although forecasts suggest it could be the biggest IPO yet seen. Meanwhile, major rival OpenAI was forced to cut its valuation target during a fundraising round, in the face of investor resistance. Meta pushed ahead with its own $95 billion capital increase aimed at data centre spending, announcing plans to raise “hundreds of billions of dollars” over the coming years. Markets questioned the timing of future returns on AI investment, after forecasts for 2027 hyperscaler capex topped $1.3 trillion.
EU turns to retro cars
As competition from Chinese electric vehicles intesifies, European carmakers are reinventing legacy models as affordable retro-inspired EVs to defend their market share. Following Renault's revival of the R5 and the Twingo, Citroën is bringing back the 2CV, and Volkswagen's new ID.Polo is based on the classic Golf. Meanwhile, China agreed to restrict hybrid car exports to the EU to help rebalance the bloc's trade deficit. However, even as European carmakers drive to develop EVs more quickly and cheaply, Chinese manufacturers are ramping up their production capabilities in Europe, aiming to sidestep any protectionist measures.
On the radar
All eyes will be on key battleground states as US voters decide whether the Republican party will retain control of Congress. Spiralling energy costs stemming from the unpopular Iran war could bolster Democrat gains, raising the prospect of legislative gridlock.
Spain will also be going to the polls, for its fifth general election 10 years, after a snap election was called for late November. The housing crisis and soaring rents are likely to be a key flashpoint, following mass protests on the streets of Madrid.
Against a backdrop of record summer temperatures and rising sea levels, governments' resolve will be tested at the COP31 UN Climate Change Conference. National delegations will attempt to reconcile urgent energy concerns with pressure to accelerate climate action.