Fin-X Weekly Update 2nd November 2026

Global equities slipped last week as a sharp Friday sell-off in technology stocks overshadowed strong US growth and earnings.

Emerging markets fell on semiconductor weakness and election results. Chinese activity indicators slipped back into contraction.

Major central banks left rates on hold. The RBA is expected to raise the cash rate tomorrow after disappointing inflation data. Central banks in the UK and Sweden are also expected to raise the policy rate.

This week also brings the US midterm elections, the US labour report, and more corporate earnings.

Australian assets outperformed global peers last week. The S&P/ASX 300 rose +1.4%, finishing October +1.1% higher, while Australian real estate gained +3.8%.

The relative strength came despite a likely interest rate rise to 4.85% tomorrow, following an upside surprise in September CPI and earlier remarks from RBA staff. Headline consumer price inflation reached +4.3% yoy in September, while the trimmed mean measure rose +3.6% in the monthly series. Producer price inflation was slightly softer over the quarter at +1.1%, and remained at +3.6% over the full year. Markets are pricing an 80% probability of the increase, but futures indicate that the Australian share market is not expected to follow Wall Street lower at the open today.

International indices struggled in comparison. Technology-heavy markets came under pressure despite a strong US GDP result that was matched by unusually good earnings growth. The MSCI World ex-Australia index fell -0.3% for the week and -1.9% in October in Australian dollar (unhedged) terms.

According to the BEA, the US economy grew at an annualised pace of +3.4% in the third quarter, beating consensus forecasts by 0.2 percentage points. Investment in equipment was a significant contributor, reflecting ongoing strength in AI-related capital expenditure. Consumer spending was slightly below forecasts, though still up +0.5%.

Some 60% of S&P 500 companies have now reported quarterly results, with earnings up +29.4% over the last twelve months. According to Bloomberg, the energy sector has enjoyed the strongest profit growth, at +144.8% yoy, due to elevated oil prices on the back of the war in the Persian Gulf. Even so, the S&P 500 fell -0.6% for the week on AI capital expenditure concerns, while the Nasdaq Composite dropped -2.0%.

Alphabet traded -12.6% lower over the week after reporting negative free cash flow of US$9.07 billion for the third quarter, with revenue and earnings from its Google search and advertising business falling short of analyst expectations. The company also maintained its full-year capital expenditure forecast, having lifted guidance to between US$195 billion and US$205 billion in the second quarter.

Amazon's share price fell -3.1%. Record operating income and accelerating AWS growth were offset by a revenue and EPS miss, along with the slowest e-commerce growth in three years. Capital expenditure also significantly exceeded analyst expectations.

Intel, which is partly owned by the US government, saw its share price decline -28.6% on Friday. The company reported record results in its data centre and AI segment that significantly exceeded expectations, but also weakness in the PC sector, rising memory prices and supply constraints. Overall, the results beat on EPS and gross margin, but catastrophic fourth-quarter guidance – compounded by a fatal explosion at Intel's Fab 28 facility in Israel – triggered the stock's worst single-day decline in more than four decades.

Microsoft was a comparative bright spot, rising +3.0% after growth in its Azure cloud infrastructure business helped it beat on both the top and bottom lines in the fiscal first quarter. Even so, the share price ended the week -0.5% lower as the entire sector was sold.

Similarly, in emerging markets, Korean chipmaker SK Hynix reported third-quarter operating profit that sharply beat analysts' estimates, surging +632% from a year earlier. The shares closed +10.9% higher on Wednesday, but ended the week only +0.4% higher in US dollars after Friday's sell-off.

Adding to financing strains, Anthropic filed for its long-awaited IPO on Monday, putting the company in a position to pursue what could be the largest initial public offering in history. Despite impressive revenue growth, the filing suggested that the company expects capital expenditure to rise substantially in 2027.

In preparation, Anthropic held US$131.7 billion in cash and equivalents, exceeding the liquid assets of every non-bank US company except Berkshire Hathaway and Alphabet. Never before has a company gone public with anywhere near this amount of cash.

It also emerged that OpenAI is now seeking about US$20 billion at a valuation of US$1.25 trillion, down from US$30 billion at US$1.4 trillion, the Financial Times reported on Friday. OpenAI has confidentially filed to go public, but has said a debut is unlikely to take place until 2027.

Bitcoin fell -3.2% in US dollars over the week after hackers reportedly drained US$6.4 billion from the Binance crypto exchange, in what has been described as the largest cyber theft ever recorded. It is unclear whether, or how, AI was used in the theft, but crypto-analytics firm Chainalysis reported signs that automation had been used to launder the digital assets, according to Bloomberg. Roughly half of the assets have been frozen, but it is not yet clear whether customers will suffer losses. A North Korean state-linked group is suspected to be responsible.

The MSCI Emerging Markets index fell -0.8% for the week and -9.1% for the month in Australian dollars, on the back of semiconductor weakness and election results.

Chinese industrial profits grew +14.4% over the last year, but the CSI 300 index lost -7.8% during October. Over the weekend, China's official PMIs slipped back into contractionary territory, with particular weakness evident in non-manufacturing orders.

A surprise win for the incumbent left-wing candidate in Brazil's presidential run-off election saw the Bovespa index shed -24.3% last week.

Israel's election produced a record 77.9% turnout but no clear winner. Netanyahu's party won 53 seats, just ahead of the left-wing opposition on 48. However, no party secured the 61 seats required for a majority to form a government, opening the door to weeks, if not months, of negotiations.

The Federal Reserve, ECB and Bank of Japan all left rates on hold as expected last week.

The FOMC decision raised eyebrows as Chair Walsh pointed to broadening economic growth and stubbornly high inflation. He rejected the suggestion that the decision to hold was related to this week's midterm elections, saying that the period leading up to the December meeting would be rich with relevant data.

Published alongside the GDP figures, the Fed's preferred PCE inflation gauge remained well above the 2% target in September. The headline rate accelerated to +3.6% yoy, with core prices rising +3.1% yoy.

It was also announced that ECB President Christine Lagarde will leave the ECB in February next year, nearly nine months before her term was due to end. Her successor will be chosen as the bank faces other leadership changes, with Chief Economist Philip Lane and board member Isabel Schnabel, who is responsible for market operations, also due to leave next year.

Along with the RBA, the central banks of the UK and Sweden are expected to raise rates this week, while Norway's central bank is expected to hold.

The Republican Party is bracing for a difficult midterm election result that is likely to see the Democrats take control of the House of Representatives and possibly the Senate. President Trump is said to be preparing for further military action against Iran once the elections are out of the way.

OPEC+ will also meet this week, the ISM surveys and the US monthly labour report are due, and the 142 S&P 500 companies reporting results will include Apple, Berkshire Hathaway, Qualcomm, Palantir and Block.

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