October 2026 Market Review: Resilient growth and shifting market leadership

In this article

1. Market and Macro Overview
2. Equities overview
3. Fixed income overview
4. Commodities overview
5. Currencies
6. In focus: upcoming macro data releases
7. Conclusion

Global equities, measured by the MSCI All-Country World Index, declined in October as investors reassessed the earnings outlook and financing needs of AI-related companies. Weakness was concentrated in technology and selected emerging markets, while energy and defensive sectors advanced, signalling a shift in market leadership. Although economic growth remained resilient, investors became more selective about the companies benefiting from the investment cycle.

Fixed income recovered as investors sought safer assets and government bond yields eased, supporting bond prices and offering some diversification as equities weakened. Commodity markets diverged: oil prices rose amid concerns over Middle East energy supplies and renewed tensions, while gold declined despite lower US Treasury yields.

Market and Macro Overview

• The Federal Reserve, ECB and Bank of Japan kept interest rates unchanged while assessing persistent inflation pressures. The Federal Reserve maintained its target range at 3.75–4.00%, although two members favoured a further increase. The ECB held its policy rate at 2.50%, warning that a prolonged energy shock could both raise inflation and weaken growth. In Japan, the BoJ maintained its policy rate at 1.25% and announced that it would accelerate sales of its ETF holdings from January 2027, marking another step toward unwinding years of extraordinary monetary stimulus.

(Source: Federal Reserve, policy statement, 28 October 2026; ECB, monetary policy decisions, 29 October 2026; BoJ, monetary policy statement, 30 October 2026)

• In its October 2026 World Economic Outlook, the IMF projected global growth of 3.1% in 2026 and 3.4% in 2027, with global headline inflation rising to 4.7% in 2026 before easing to 4.1% in 2027. Growth is expected to be supported by continued technology-related investment and trade, resilient domestic demand in major economies, and fiscal support in selected countries. However, the IMF cautioned that further geopolitical escalation, fiscal vulnerabilities and a reassessment of AI-related expectations could weaken the outlook.

(Source: IMF World Economic Outlook, 13 October 2026)

• United States data released during October showed real GDP growing at an annualised 3.4% in Q3, following 2.2% in Q2. Consumer spending and private fixed investment together expanded at an annualised 4.9%, indicating continued strength in underlying domestic demand. Business fixed investment increased at an annualised 12.7%, with investment in information-processing equipment rising 37.4%, software 9.6%, and research and development 7.5%. This is consistent with the ongoing AI infrastructure buildout, which is supporting demand for computing equipment and software.

(Source: U.S. Bureau of Economic Analysis, via FRED; Q3 2026 advance estimates, released 29 October 2026)

• Labour-market data were softer: September payrolls rose by 29,000, compared with a revised 133,000 in August, and unemployment edged up to 4.2%, matching the Federal Reserve’s September median longer-run estimate. Headline CPI inflation increased to 3.7% year on year from 3.4%, while core inflation rose to 2.6% from 2.4%. Higher gasoline prices accounted for more than half of the monthly increase in headline CPI.

(Source: BLS, Employment Situation, September 2026, 2 October 2026; Consumer Price Index, September 2026, 14 October 2026; Federal Reserve, Summary of Economic Projections, 16 September 2026)

• Euro area growth moderated as inflation accelerated. Preliminary estimates by Eurostat showed GDP expanding by 0.4% quarter on quarter in Q3, following 0.6% in Q2. September headline inflation increased to 3.8% from 3.2% in August, with energy making the largest contribution. This combination presented a challenging earnings backdrop: higher input costs threatened margins, while pressure on household purchasing power could constrain companies’ ability to pass those costs on to customers.

(Source: Eurostat, 17 and 30 October 2026)

• According to the latest economic data released during the month, South Africa faced rising fuel costs. September inflation edged up to 4.5% from 4.4%, with fuel prices increasing by 6.2% over the month. The SARB repo rate remained at 7.25%, following September’s increase of 25 basis points. The SARB’s October Monetary Policy Review projected inflation to remain elevated above 5% until the second quarter of 2027, highlighting the risk that persistent fuel and other cost increases could become embedded in wages and inflation expectations.

(Source: Statistics South Africa, 21 October 2026, and SARB, 6 October 2026)

Equities overview

Global equities declined in October, with the MSCI All Country World Index falling by 1.6% despite resilient economic data, as concerns over the returns on AI investment drove a correction in technology stocks. Emerging markets underperformed developed markets, with the MSCI Emerging Markets Index falling by 8.1%, compared with a 0.8% decline for the MSCI World Index.

• United States equities delivered mixed performance in October. The S&P 500 and Nasdaq declined by 0.93% and 5.30% respectively, while the Dow Jones gained 1.70%. AI-related stocks weakened as rising capital expenditure pressured free cash flow and increased uncertainty over investment returns. Energy led sector performance, supported by higher oil prices, followed by consumer staples, utilities and healthcare. Technology and communication services lagged and delivered negative returns over the month. This shift also favoured value stocks, which outperformed growth stocks.

(Source: Nasdaq, October 2026 Review and Outlook, 2 November 2026; Morningstar, data as at 30 October 2026)

• European equities recovered in October, with the STOXX 600 rising by 1.96%. Strong quarterly earnings and gains in defensive sectors supported the market, although the global technology sell-off limited gains towards month-end. Germany’s DAX advanced by 2.46%, while France’s CAC 40 edged up by 0.06%. France’s fiscal and political uncertainty remained a headwind, with concerns that higher government borrowing costs could place additional pressure on the banking sector.
• Japanese equities declined in October, with the Nikkei 225 falling by 5.19%. Semiconductor and AI-related stocks came under pressure as investors reassessed the profitability of technology investment. Higher energy costs also weighed on the outlook for Japan’s import-dependent economy.
• Emerging market equities weakened sharply in October. Technology-heavy markets were particularly exposed, with MSCI South Korea and MSCI Taiwan declining by 16.76% and 6.16% respectively, as concerns over AI investment returns and growing Chinese competition weighed on semiconductor shares. The MSCI China Index fell by 7.13%. Domestic demand remained weak despite additional policy support, including funding for infrastructure and local government finances. Brazil also underperformed, with MSCI Brazil declining by 8.22%. Lula’s unexpected re-election reversed investor expectations of tighter fiscal policy under Flávio Bolsonaro, renewing concerns over public spending, debt sustainability and the prospects for lower borrowing costs. India proved more resilient: the Sensex gained 2.73%, supported by improving sentiment towards domestic IT companies, robust quarterly earnings releases and hopes of capital-tax relief.

(Source: Reuters, 30 October 2026; Morningstar, data as at 30 October 2026)

• In South Africa, the FTSE/JSE All Share Index declined by 0.82% in October. Falling gold and platinum-group metal prices weighed on mining shares, with the Resources 10 Index losing 9.1%. Financials and industrials provided some support, advancing by 3.7% and 3.8% respectively.

(Source: Morningstar, data as at 30 October 2026)

Fixed income overview

Global fixed income markets recovered in October, with the Bloomberg Global Aggregate Bond Index gaining 1.4% in US-dollar terms. Government bonds benefited from demand for safer assets amid equity-market volatility. In the United States, strong demand at the 7 October 10-year note auction and the 8 October 30-year bond auction provided additional support for Treasuries.

Over the month, the US 10-year Treasury yield fell by 35 basis points, from 5.29% to 4.94%, while the 30-year yield declined by 33 basis points, from 5.64% to 5.31%. These declines partly reversed September’s sharp yield increases and supported government bond returns.

(Source: Reuters, Treasury auction reports, 7 and 8 October 2026; U.S. Department of the Treasury, Daily Treasury Par Yield Curve Rates, 30 September and 30 October 2026)

(Source: U.S. Department of the Treasury, data as at 30 October 2026)

South African bonds returned 2.1% in October, as measured by the FTSE/JSE All Bond Index. Lower global bond yields supported the recovery, alongside a favourable domestic fiscal outlook.

The Medium-Term Budget Policy Statement reaffirmed fiscal consolidation and announced plans to reduce fixed-rate bond issuance and introduce a bond buyback programme, easing supply concerns and supporting bond prices. However, higher fuel prices continued to pose risks to inflation and the outlook for interest rates.

Commodities overview

• WTI rose by 15.2% to USD 104.1 per barrel. Renewed Middle East tensions supported prices, as reported attacks on energy infrastructure and shipping raised concerns over potential disruptions to oil production and exports.
• Gold fell by 6.8% to around USD 3,875.4 per troy ounce. Persistent inflationary pressures, reinforced by higher oil prices, sustained expectations that interest rates would remain elevated for longer, keeping the opportunity cost of holding non-yielding gold high despite the monthly decline in Treasury yields.

(Source: Investing.com, data as at 30 October 2026)

Currencies

• Sterling appreciated by 0.95% against the US dollar over the month, benefiting from expectations that the Bank of England would raise its policy rate by 25 basis points to 4.0% at its 5 November meeting, amid broad dollar weakness.
• The euro declined by 1.5% against the US dollar. Concerns over France’s ability to pass a deficit-reducing budget and contain its debt burden fuelled selling in French bonds, with fears of wider euro-area contagion weighing on the currency.

(Source: Investing.com, data as at 30 October 2026)

In focus: upcoming macro data releases

• 6 November: US employment report (October)
• 10 November: US CPI inflation (October)
• 5 and 19 November: central bank decisions (Bank of England 5 November, South African Reserve Bank 19 November)
• 25 November: US Q3 GDP (second estimate) and October PCE inflation

(Source: U.S. Bureau of Labor Statistics and U.S. Bureau of Economic Analysis, November 2026 release calendars; Bank of England and South African Reserve Bank, 2026 monetary policy announcement schedules)

Conclusion

October highlighted that resilient economic growth and strong AI investment do not necessarily translate into broad-based equity gains. Investors increasingly scrutinised financing needs and cash generation, while strength in energy, defensive sectors and government bonds helped cushion technology weakness. The divergence reinforced the importance of diversification across sectors and asset classes.

Looking ahead, earnings delivery, energy prices and central-bank policy will remain important drivers of returns. Persistent inflation could constrain further bond gains and keep pressure on equity valuations, even if economic activity remains resilient. For investors, this places greater emphasis on managing concentration risk, assessing companies’ ability to fund expansion and balancing the diversification benefits of bonds against interest-rate and sovereign credit risks.

Performance to 31 October 2026

(Source: Morningstar, Investing.com & MAURITIUS COMMERCIAL BANK LTD)

MUR exchange rates are based on the indicative mid-market exchange rate as at the date of this report. Actual rates may vary.

Disclaimer: Intrasia Wealth Ltd (IWL) does not warrant for the correctness and accuracy of the information herein contained which is provided for indicative purposes only. IWL shall not, in any circumstance whatsoever bear responsibility or be held liable for any error, or omission, or any loss which may arise as a result of your reliance upon the present data. Returns for periods greater than one year are annualised.

This article is general market commentary, not investment advice or a personal recommendation. The value of investments can fall as well as rise, and past performance is not a guide to future returns. Written and reviewed under our editorial standards.