Global Markets Overview | October 2026
06 November 2026
Ashburton Investments
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September's concentrated gains in technology and growth-oriented markets gave way to a sharply divergent October, as the artificial intelligence (AI) and semiconductor trade underwent an abrupt mid-month correction, Hormuz tensions deteriorated materially, and major central banks delivered a widely anticipated “pause”. Despite the reprieve from further tightening, markets found little comfort, with the global macro configuration remaining deeply challenging and dispersion across regions and sectors widening considerably
Global equity markets delivered a broadly mixed outcome in October (MSCI World: +0.74%; MSCI Emerging Markets: -6.52%), once again masking extreme dispersion beneath the surface. Three interlocking themes defined the month. First, major central banks held rates in line with consensus, providing a brief reprieve from the September tightening shock – though hawkish forward guidance kept the higher-for-longer narrative firmly intact. Second, the Strait of Hormuz situation deteriorated materially from September's already-elevated baseline amid escalating attacks with diplomatic efforts producing only tentative progress. Third, the AI and semiconductor trade that had powered September's technology rally underwent a painful mid-month correction (most acutely felt in chip-heavy Asian markets), as investors began questioning the pace and profitability of AI infrastructure spending across the ecosystem, before experiencing a partial recovery late in the month on the back of blockbuster earnings from South Korea's SK Hynix.
In the United States (US), the S&P 500 (+1%) delivered a solid gain, while the Nasdaq 100 (-3.29%) reversed course as AI enthusiasm gave way to profit-taking and concerns over the sustainability of hyperscaler capital expenditure. The US Federal Reserve (Fed) held rates steady at its October meeting in a 10-2 vote, maintaining the target range at 3.75% to 4%. Fed Chair Kevin Warsh emphasized the central bank’s "readiness to act as circumstances require" at the December meeting, noting that "the accumulation of more information will help the committee determine the policy stance appropriate to ensure a timely return of inflation to the committee's 2% goal". Against this backdrop, US Treasury yields moved lower, with both the 2-year and 10-year yields declining as the Fed's decision to remain on hold provided some relief to bond markets. Moving over to the eurozone, the Euro Stoxx 50 (-0.8%) was fairly volatile, weighed by global macro pressures as well as political instability in France. The European Central Bank (ECB) left its deposit rate on hold at 2.50%, in line with expectations, however, markets continue to price in a final 25-basis point (bp) hike in December. Asian markets delivered the month's starkest divergence. South Korea's KOSPI (-13.16%) was the worst-performing major index globally, as the AI and semiconductor trade unwound sharply. However, the KOSPI rallied ~6.63% on 28 October after SK Hynix reported a seven-fold surge in operating profit and announced a ~$45 billion shareholder return plan, reaffirming that memory chip shortages are expected to persist through at least 2030. Japan's Nikkei 225 (-3.14%) suffered materially, caught between the global AI selloff and a USD/JPY rate near 157.66 (~3.8% depreciation from the recent peak in July), though the weaker yen provided limited offset as export earnings faced headwinds from slowing global demand. The Bank of Japan (BoJ) held rates at 1.25%, in line with consensus, but remains committed to raising rates in response to any economic and price developments. Hong Kong's Hang Seng (-6.59%) continued to face pressure from US semiconductor restrictions on China and elevated energy costs. Locally, the JSE All Share gained 1.85%, supported by limited exposure to AI-driven market volatility and a “bond-friendly” medium-term budget that reinforced confidence in South Africa's fiscal trajectory through debt stabilisation and a proposed fiscal anchor. US dollar returns, however, were relatively flat as the rand weakened meaningfully towards month end.
Brent crude’s 11% surge to $114.88/barrel (bbl) was driven by a sharp increase in Iranian tanker attacks, a US advisory urging vessels that don’t need to transit the Hormuz area to avoid the region, and reports that Washington had warned several Gulf nations to prepare for a short, intense military campaign against Iran. While prices retreated from a monthly high of $117.38/bbl as physical market conditions showed tentative signs of easing, Brent remains near year-to-date highs, with pricing increasingly influenced by geopolitical risks rather than underlying supply fundamentals. Among precious metals, gold declined 3.2% to $4 021.52/ ounce (oz.), pressured by a firm US dollar and elevated bond yields that reduced the appeal of non-yielding assets. Platinum fell a steeper 13.2% to $1 489.18/oz., reflecting not only the same macroeconomic headwinds but also its greater exposure to industrial and automotive demand, which remains subdued. The Bloomberg Agriculture Spot Index fell ~5.1%, continuing its partial reversal of the supply-chain-driven gains seen in July and August.
Markets enter November navigating a macro environment that remains challenging but has evolved in important ways over the course of October. The coordinated central bank pause has provided a degree of breathing room, though forward guidance leaves little doubt that the tightening cycle is not yet complete. The Strait of Hormuz conflict has deteriorated further into active confrontation, though the late-October regional diplomatic push involving key regional powers represents the most substantive mediation effort to date. The risk of renewed military action against Iran nevertheless remains a significant tail wind. On the technology front, the late-month recovery was characterised as a fundamental re-anchoring, driven by hard earnings data, rather than a simple sentiment rebound. However, sustainability remains a key concern among investors. As a result, the key near-term catalysts to monitor include the trajectory of US-Iran negotiations and the risk of renewed military escalation, December central bank meetings (particularly the Fed and ECB, where further hikes remain the base case) and whether the broader technology earnings season validates SK Hynix's constructive read on AI infrastructure demand.
*Written by the FNB Wealth and Investments Research team
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