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Global equities experienced sharp volatility during the week, as artificial intelligence and semiconductor sell-off erased the post-election improvement in risk sentiments. The U.S. midterm election outcome reduced political uncertainty and initially supported cyclical and domestic-oriented stocks. However, broader global equity performance was weighed down by losses in large-cap growth shares, resulting in a pullback in worldwide equity markets. At the same time, the Bank of England raised interest rates by 25 basis points to 4.0% and signalled that borrowing costs could move higher still, reinforcing fears that restrictive monetary policy will persist. Sentiment was further weighed down by a deadly Russian strike in Ukraine ahead of planned peace talks, while a cyber theft at Credit Mutuel Arkea and Micron’s suspension of its Taiwan chip project added to uncertainty surrounding the financial and technology sectors

In global geopolitics, tensions in the Middle East resurfaced after Saudi Arabia issued warnings around its key Yanbu oil export hub following Houthi attacks, fuelling concerns over potential energy supply disruptions and higher inflation. The outcome of the U.S. midterm elections, resulted in the Democratic Party regaining control of the Congress, which prompted reassessments of the policy outlook across fiscal, trade, energy and regulatory areas. India’s Finance Ministry initiated a review of long-term capital gains taxes for foreign portfolio investors. In Indonesia, public protests over rising living costs, economic conditions and income inequality underscored growing social discontent, with demonstrators calling for greater government action to address affordability pressures and employment concerns.

Global equities advanced over the week, as investors navigated mixed corporate earnings and macroeconomic data in inflation, interest rates, and global growth. Global equities were supported by strength in select technology and semiconductor stocks, with Asian markets benefiting from continued investor interest in artificial intelligence-related companies and improving earnings sentiment. In the United States, equity markets were volatile as investors reacted to major earnings releases from large-cap technology companies and assessed the Federal Reserve’s policy outlook. Although technology leaders helped support market sentiment, weaker-than-expected results and cautious guidance from others contributed to market volatility. European equities also recorded moderate gains amid generally constructive earnings results.

In global geopolitics, tensions in the Middle East continued even as senior officials from Saudi Arabia, Turkey, Pakistan, and Iran engaged in diplomatic discussions aimed at maintaining regional stability and open lines of communication. U.S. Vice President JD Vance initiated efforts to restart peace negotiations with Iranian Security Council Chief Mohsen Rezaei, even as reports indicated the possibility of a potentially short, intense military campaign following the U.S. midterm elections. In France the economy contracted by 0.1% in the third quarter,  even as the government navigated complex budget negotiations and fiscal policy debates amid a challenging economic backdrop and elevated political tensions. The closely contested second-round presidential run-off election in Brazil, concluded with a narrow re-election of incumbent President Lula da Silva. This was challenged by Flávio Bolsonaro, citing arbitrary voting-hour extensions by the Supreme Court.

Global equities declined over the week due to a sharp late-week sell-off in technology and artificial intelligence-related stocks that weighed on U.S. and Asian markets. Investor sentiment deteriorated as concerns emerged over the sustainability of AI infrastructure spending and downward revisions in forward earnings expectations. In the U.S. the tech-heavy Nasdaq Composite and the broader S&P 500 index declined while the less technology-concentrated Dow Jones Industrial Average rose over the week. Rising oil prices linked to Middle East tensions and higher-for-longer interest rate expectations also increased market volatility. However, resilience in non-technology sectors helped limit broader market declines. 

In global geopolitics, tensions in the middle-east and civil unrest across Europe continued. Geopolitical tensions in the Middle East intensified as attacks on commercial shipping in the Strait of Hormuz increased. Domestic political and social tensions remained elevated across the Eurozone, with protests and transportation disruptions in Italy reflecting growing concerns over living costs and fuel prices, while French authorities introduced targeted restrictions on public demonstrations as student-led unrest broadened across several cities. The Russia-Ukraine conflict continued to pose challenges for regional energy infrastructure and supply chains with continued drone and long-range strikes against military, industrial and energy-related targets.

Global equities declined over the week, as softer technology shares, inflation concerns, and ongoing debate over the sustainability of AI-driven market leadership triggered a risk-off sentiment among investors. While U.S. markets experienced a rotation away from some mega-cap growth stocks, international developed markets were mixed and emerging markets lagged, resulting in a broad-based pullback across global equities. Nevertheless, the decline was relatively contained, reflecting continued support from resilient economic activity and expectations that easing bond yields could provide a more favorable backdrop for risk assets. 

In global geopolitics, ongoing tensions surrounding Russia and Ukraine and concerns over the durability of the recently announced energy ceasefire and its implications for global energy supplies, contributed to elevated oil prices and heightened market uncertainty. This was accompanied by escalating security risks in the Middle East. The attack by Iran-backed Houthi militants on Riyadh’s international airport prompted the United States to consider direct military intervention in Saudi Arabia. The continuing risk to regional energy infrastructure reinforced concerns about potential disruptions to global energy markets. The International Energy Agency (IEA) warned that the global diesel supply crunch could persist into 2027 as ongoing disruptions to fuel exports continue to tighten inventories, reigniting international stagflation fears.

Global markets edged lower as investors reacted to escalating Middle East tensions and their impact on energy markets. American equities however ended the week higher despite a mid-week slump due to the selloff in technology company stocks. Concerns intensified after attacks on tankers in the Strait of Hormuz and Saudi infrastructure heightened fears of supply disruptions, pushing oil prices higher and reviving inflation worries. Globally markets reassessed the likelihood of further monetary tightening. Technology stocks also faced pressure following renewed concerns about AI-related valuations. The combination of geopolitical risk and rising energy costs weighed on investor sentiment and global equity markets.

In global geopolitics, escalating geopolitical tensions in the Middle East and strategic supply-side policy interventions influenced investors. The Trump administration announced an agreement with Russia aimed at easing energy-market pressures, alongside domestic executive actions easing fuel taxes, to expand diesel supply and facilitate additional fuel availability, which helped moderate concerns about global energy shortages. However, widening U.S. trade deficit and hawkish signals from Federal Reserve officials reinforced concerns of a hawkish monetary policy. Geopolitical tensions in the Middle East continued with Iran-backed Houthi drone strikes targeting commercial airports in Saudi Arabia and attacks on shipping tankers in the Strait of Hormuz.

Global equity markets advanced modestly over the week, as a late-week rebound offset the steep geopolitical sell-off earlier in the week. Middle Eastern tensions and a massive multi-decade surge in sovereign bond yields, led to a risk-off sentiment earlier in the week. However, investor sentiment improved, following a significantly cooler-than-expected U.S. nonfarm payrolls report which raised expectations that major central banks would maintain a relatively measured policy stance despite ongoing geopolitical uncertainties. The overall positive sentiment toward global growth and earnings prospects helped support equity markets, despite periodic volatility reflecting geopolitical risks.

In global geopolitics, reports that the United States was reinforcing its regional military presence by deploying a third aircraft carrier and additional troops to the Middle East, raised the risk of further disruption to energy production and shipping bottlenecks, pushed oil prices higher. The Russia-Ukraine war and broader U.S.-China strategic competition, including Taiwan security developments, also underscored longer-term geopolitical risks to the global economy.

Global equity markets fell during the week as macroeconomic headwinds of surging U.S. Treasury yields, rising oil prices and increasing expectations of an additional Federal Reserve rate hike weighed on risk sentiment. Persistent Middle East tensions and higher borrowing-cost concerns prompted investors to reduce equity exposure. On the other hand, investor sentiment in the U.S. was supported by renewed enthusiasm for artificial intelligence-related investments, particularly within technology stocks, which helped offset concerns surrounding elevated government bond yields, inflation pressures, and geopolitical risks. Developed markets generally outperformed, while emerging markets faced pressure from higher oil prices and tighter financial conditions. Overall, the week highlighted a widening performance wedge, where robust AI-led momentum in developed regions effectively cushioned broader inflationary and geopolitical anxieties

In global geopolitics, high-stakes diplomacy at the 81st United Nations General Assembly took center stage. Reports that U.S. and Iranian officials held quiet, sideline negotiations in New York, which led to speculation regarding a phased seven-day ceasefire and a potential operational off-ramp to de-escalate the broader Middle East conflict and successfully defused near-term supply anxieties surrounding the critical Strait of Hormuz shipping lane. This diplomatic pivot triggered a sharp contraction in energy risk premiums, pulling international benchmark Brent crude prices down by Friday’s close. The Washington-Beijing bilateral trade and technology summits concluded with minimal structural progress, keeping global supply chain and tariff anxieties firmly intact.

Global equity markets fell during the week as Brent crude surged above US$108 per barrel following attacks on Saudi Arabia’s East-West pipeline and heightened disruption risks across the Red Sea and Bab el-Mandeb Strait. The capture of strategic territory by Houthi forces further intensified concerns over global trade routes, energy security and inflationary pressures. While energy stocks benefited from rising oil prices, broader equity markets struggled amid fears that higher input costs could undermine economic growth and corporate profitability. 

In the United States, equities also declined as the Federal Reserve raised interest rates by 25 basis points, marking its first increase in more than three years and signalling further policy tightening to address persistent inflation. Stronger-than-expected retail sales data highlighted continued consumer resilience but reinforced expectations of restrictive monetary policy. Geopolitical developments remained prominent, with U.S. officials engaging in talks with Houthi representatives in Oman and the U.S. administration proposing a US$2.8 billion military aid package for Israel.

Global equity markets declined over the week as risk sentiment weakened across both developed and emerging markets amid heightened geopolitical tensions, rising bond yields, and continued uncertainty surrounding the global interest-rate outlook. Strength in artificial intelligence, semiconductor, and communications infrastructure-related stocks provided some support, but these gains were largely outweighed by broader concerns over slowing global growth, elevated energy prices, and persistent geopolitical risks. Rising crude oil prices and strains in sovereign debt markets further dampened investor sentiment, prompting a shift toward defensive positioning and weighing on economically sensitive sectors, including technology and consumer discretionary.

Geopolitical developments remained a key driver of market performance. Escalating hostilities between Iran and the United States, along with continued disruptions to critical shipping routes in the Strait of Hormuz and growing influence of Iran-aligned forces around the Bab el-Mandeb Strait, intensified concerns over global trade and energy supplies. Higher oil prices renewed inflation concerns and added to market volatility, while ongoing strategic tensions between the U.S. and China, divisions among BRICS nations, and the continuing Russia-Ukraine conflict contributed to a cautious investment backdrop. Trade frictions between the United States and Canada also added to uncertainty, reinforcing a risk-off tone across global markets.