Executive Summary
Global equities slipped in October, with the World index down 0.75% in USD. The defining theme was a reassessment of AI spending: disappointing Big Tech earnings and a slump in memory-chip stocks pushed Communication Services and IT sharply lower, while investors rotated into Energy, Consumer Staples, Health Care and Utilities. Escalating Middle East hostilities lifted Brent by close to 13% and European gas by around 40%, bonds rebounded as Treasury yields retreated from their highs, and gold and silver fell sharply.
Equity Markets – Regional Performance
1-month returns in local currency
North America
The United States fell roughly 1%. Equities were spooked on the last trading day by disappointing reactions to Big Tech earnings, with Alphabet’s post-results slide triggering a broader tech selloff, while the Fed’s decision to hold rates offered little relief as persistent inflation concerns weighed on sentiment. The damage was concentrated at the top: IT and Communication Services together subtracted more than 4 percentage points from the S&P 500, while mid and small caps outperformed their mega-cap peers and the equal-weighted S&P 500 gained about 5%, a sign of healthier breadth beneath the headline. At a P/E of 25.4, the US remains the most expensive market in the universe. Canada gained around 2%, led by Energy on higher crude, while Materials fell about 13% and base-metal stocks roughly 15%.
Europe
Europe split between defensive and rate-sensitive markets. Switzerland rose close to 7%, its heavy weighting in health care and consumer staples paying off as both sectors rallied; Germany gained close to 3% and the UK about 1%. The Eurozone fell roughly 2%, dragged down by Spain (down roughly 4.5%) and Italy (down roughly 3.5%), whose bank-heavy indices suffered as a sell-off in euro government bonds, led by French yields at their highest since 2002 on fiscal and political concerns, pushed up borrowing costs. France itself ended flat.
Asia-Pacific
Asia bore the brunt of the AI reassessment. South Korea was the weakest market in the universe, down close to 17%, as memory-chip leaders Samsung Electronics and SK Hynix sold off on fears of rising Chinese competition and heavy foreign selling. Indonesia fell close to 13% after MSCI launched a consultation on reclassifying the country from emerging to standalone market status, triggering the Jakarta index’s largest one-day fall since 1998. China dropped close to 8%, with the CSI 300 entering a bear market amid persistent macro headwinds, and Japan lost about 4% as concerns about AI investment returns hit technology and communication stocks. Australia was the bright spot, up around 2.5% on gains in Utilities, Financials and Health Care, while India was roughly flat.
Latin America
Mexico was the best market in the universe, up around 9%, helped in part by falling US Treasury yields; a peso down close to 4% against the dollar trimmed the gain for foreign investors. Brazil fell close to 8%: after an election-driven rally earlier in the month, the Ibovespa plunged almost 14% in a single session following President Lula’s re-election on 25 October, its biggest daily fall since March 2020. At a P/E of 9.7, Brazil is now the cheapest market in the universe, against 14.0 for Mexico.
Equity Markets – Sector Performance
1-month returns in USD
Sector leadership turned sharply defensive. Energy led for another month, up close to 13% on the rise in crude, followed by Consumer Staples (close to 11%), Health Care (around 10%) and Utilities (close to 8%). At the other end, Communication Services fell roughly 13% and IT about 7.5% as disappointing Big Tech results and doubts over the sustainability of AI spending hit the market’s heaviest groups. Because these two sectors carry far more weight in the global index than the defensive and energy leaders, their losses outweighed the double-digit gains elsewhere and left the World index in the red. Consumer Cyclical and Financials gained modestly, Materials was roughly flat and Industrials slipped about 1%.
Fixed Income
Bonds rebounded as safe-haven demand returned amid the tech turbulence. The US 10-year Treasury yield fell from 5.29% at the end of September to 4.94%, lifting US Treasuries by close to 2.5% and US investment grade by around 2%, while US high yield was roughly flat. The Fed held its target range at 3.75–4.00% on a 10–2 vote, and the ECB kept its deposit rate at 2.50%. Euro government bonds and euro investment grade both gained about 1%, although French bonds lagged after OAT yields climbed above 5% before easing at month-end when Moody’s left France’s rating unchanged; euro high yield slipped about 1%. EM sovereigns rose close to 2% and EM corporates about 1%. Yields to maturity remain elevated at 5.2% on Treasuries, 6.1% on US investment grade and 8.5% on US high yield, against 3.9% on euro governments.
Forex
The Swiss franc was the standout. EUR/CHF fell close to 3% to about 0.92 and USD/CHF about 1.5% to 0.825, with the franc drawing haven demand that was linked early in the month to the surge in French bond yields. EUR/USD slipped roughly 1.5% to about 1.12, leaving the euro near its 2026 lows, while USD/JPY was roughly flat at about 157.5 after the Bank of Japan held its policy rate at 1.25%. For a CHF-based investor, the stronger franc reduced returns on both dollar and euro assets.
Commodities
1-month returns in USD (EU natural gas in EUR)
Energy dominated again. Brent rose close to 13% and WTI close to 12%, a fourth consecutive monthly gain, as escalating hostilities in the Middle East, including attacks on tankers in the Strait of Hormuz and on Saudi energy infrastructure, threatened supply. European natural gas jumped around 40%, with TTF touching EUR 90/MWh for the first time in almost four years on uncertainty over Hormuz shipping, storage levels well below last year and Asian LNG prices at their highest since 2022; US natural gas eased about 2.5%. Precious metals sold off: gold lost about 7% and silver close to 19%, as hotter US inflation lifted rate expectations and the tech selloff forced liquidation of leveraged metal positions. Industrial metals were mixed, with copper flat, aluminium down about 2% and iron ore down about 6% on abundant supply and elevated Chinese inventories. Among agricultural commodities, wheat and corn both fell around 11% on improving global supply prospects and US harvest progress.
Outlook
November opens with the US midterm elections and a live debate over whether the Fed and the ECB will need to tighten again in December, with markets assigning a high probability to an ECB hike. The energy shock remains the central macro risk: as long as Gulf supply and Hormuz shipping stay disrupted, oil and gas will keep inflation sticky and policy restrictive. In equities, October was a reminder of how concentrated index risk has become. With the US still on a P/E of 25.4 against 22.7 for the world and AI spending under scrutiny, balance between growth leaders and the defensive, energy and value exposures that held up this month remains warranted, while sharply de-rated markets such as Brazil and South Korea now trade at around 10 times earnings.
La Côte Invest SA – Monthly Markets Commentary, October 2026.
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