This week, global equity markets declined, driven by expectations of a correction in AI-focused technology stocks. Investor sentiment was dampened by Berkshire Hathaway’s stock offloading and cautionary signals from major asset managers citing an overheated market. This created a self-fulfilling cycle that pressured tech stocks worldwide. Additionally, data pointing to an economic slowdown both globally and in the U.S. labor market, further contributed to the market cooling. In contrast, healthcare stocks rose following an agreement between the U.S. government and pharmaceutical firms Eli Lilly and Novo Nordisk.

In global geopolitics, the U.S. government shutdown reached a record-breaking 37th day. Meanwhile, U.S.-Canada trade negotiations remained stalled, despite Prime Minister Mark Carney’s formal apology to President Trump over Ontario’s anti-tariff advertisement. Democratic candidates secured gubernatorial victories in New Jersey and Virginia, as well as the New York City mayoral race. Egypt proposed a deal to Israel offering safe passage for Hamas members in exchange for cooperation in dismantling the terror infrastructure in Gaza.

Global Updates
  • The MSCI All Country World Index declined over the week closely tracking U.S. markets and due to the expectations of a market pullback. 
  • Canada reported 0.3% contraction in its GDP in August, due to declining oil and natural gas prices. Canada’s GDP growth is currently estimated at 0.1%  in September and 0.5% for the third quarter.
  • Prime Minister Mark Carney presented his first federal budget, which is estimated to incur a deficit of $78 billion. 
  •  Japan’s SoftBank announced a joint venture with OpenAI to provide enterprise AI services in Japan.
  • The RatingDog China General Services PMI declined to 52.6 in October due to lower international orders, however also indicating continued expansion in China’s services sector. On the other hand, Chinese exports were lower than expected in October due to a 1.1% decline and imports rose by 1%. 
  • Gold futures edged up due to the rising expectation of a rate cut by the U.S. Fed in December and the continuing U.S. government shutdown. 
  • Oil futures ended the week lower on fears of excess supply and cooling demand for oil. The OPEC+ nations have decided to slightly increase the supply in December followed by a pause in further increases over the first quarter of 2026. Weak job market reports and a mandated 10% reduction  in air traffic in the U.S. have also weighed on international oil prices. U.S. crude stocks have also risen due to higher imports.
U.S. Equity
  • The S&P 500, Dow Jones, and Nasdaq indices were weighed down by concerns of an AI bubble and labour market data. The investors’ AI optimism was originally damaged by Berkshire Hathaway’s stock sales outpacing purchases over the third quarter and its record high cash holdings of $382 billion. The possibility of a 10% to 20% market correction estimated by the major asset managers, including the CEOs of Goldman Sachs and Morgan Stanley, led to a market pullback. s The U.S. Supreme Court is also currently considering the legal validity of the Trump Tariffs, which could have a further impact on the markets. 
  • A report published by Challenger, Gray & Christmas showed that U.S. employers have laid off 153,074 employees in the month of October, due to costs and AI. Technology firms, retailers and service providers led the job cuts in the private sector. The Chicago Fed also estimated unemployment had risen to 4.4% over the month. On the other hand, the ADP jobs report showed the U.S. private sector added 42, 000 jobs in October and pay was 4.5% higher. 
  • President Donald Trump announced deals with Eli Lilly and Novo Nordisk to cut the prices for their GLP-1 weight-loss drugs for the government’s Medicare and Medicaid programs.
  • Pfizer raised its bid to acquire Metsera to $10B. Pfizer is competing with Novo Nordisk in its bids to takeover the weight-loss startup.
  • Tesla shareholders voted on CEO Elon Musk’s trillion dollar pay package. Tesla is also seeking regulatory approval for its autonomous driving software in China. 
  • U.S. airline stocks lagged following U.S. Transportation Secretary Sean Duffy’s order to cut flight traffic by 10% at 40 major U.S. airports. The order was driven by flight disruptions due to the lower availability of air traffic controllers and TSA agents, who have been working without pay since the government shutdown. 
  • Palantir reported an adjusted EPS of $0.21 in the third quarter, on a 63% higher revenue of $1.18 billion. The company raised its full year revenue outlook to the $4.396 billion to $4.4 billion range due to AI driven demand.
  • Advanced Micro Devices posted record 36% growth to a higher-than-expected third-quarter revenue of $9.25 billion and an adjusted EPS of $1.2. Demand for chips by AI data centers led to a 22% jump in sales to $4.3 billion. AMD’s exports of AI chips to China could resume with the one-year U.S.-China trade agreement.
  • In acquisitions this week, Kimberly Clark agreed to acquire Kenvue for $49 billion and Eaton agreed to acquire Boyd Corporation’s thermal business from Goldman Sachs for $9.5 billion.
Fixed Income
  • The Bloomberg U.S. Aggregate Bond Index edged up over the week.
  • The U.S. 10-year Treasury yield edged down to 4.091% and the yield on the 2-year note fell slightly to 3.566% over the week. 
  • The U.S. Dollar Index edged lower to 99.65 this week due to signs of weakness in the U.S. labour market.

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