Fin-X Weekly Update 9th November 2026
The US mid-term elections handed the Democrats a clean sweep, prompting a risk-off rotation and a sharp fall in oil prices. Technology and semiconductor stocks were hit worldwide on the prospect of slowing data centre development.
Australian assets again outperformed, even as the Reserve Bank raised the cash rate to its highest level in 18 years. Other major central banks also tightened, with further G10 rate rises expected in December.
The week ahead brings a lighter earnings diary, along with important US inflation data, Chinese trade figures, and Australia's business and consumer surveys.
Australian assets outperformed global peers again last week, with the local market largely shielded from the fallout of the US mid-term elections. Global investors rotated out of growth names, while bonds, gold and defensives such as real estate benefited.
The Reserve Bank raised interest rates to an 18-year high of 4.85% on Melbourne Cup Day, as expected. However, the split 6–3 vote and accompanying statements suggested the Board may be nearing a peak in the hiking cycle, and by the end of the week the market had priced out all prospect of a further hike as oil prices fell.
The RBA's quarterly Statement on Monetary Policy revised trimmed mean inflation forecasts higher, to +3.6% by December 2026 from +3.3% previously, with a return to the top of the 2–3% target band now not expected until late 2027.
Australian Implied Overnight Interest Rates
The indication to raise "further if needed" was removed from the Governor's statement, despite the higher inflation estimates and stronger-than-expected domestic capacity pressures.
The Reserve Bank also expects a steeper housing downturn. The Commonwealth Bank also forecasts house prices to record a peak-to-trough decline of around -14%.
Despite the softer RBA outlook, household spending remained robust in September, rising +6.8% yoy according to the ABS, though the August result was revised lower to +6.5% yoy from +6.8% yoy.
Among corporates, NAB (-3.6%) and Macquarie (-1.4%) disappointed the market on higher impairment charges and a lower dividend, respectively. David Jones collapsed into voluntary administration on Thursday after 188 years of trading, following the breakdown of last-ditch rent negotiations with major landlords including Scentre Group.
NextDC was the week's most dramatic single-stock story. Shares had been deeply depressed following an October guidance cut linked to delays at its M3 Melbourne data centre site, but surged as much as +49% on Thursday after a joint venture between Goodman Group and US-listed Digital Realty Trust launched an after-market raid seeking up to 9.9% of the company, at a 45% premium to Wednesday's close. The joint venture ultimately acquired approximately 8% of the register.
The US mid-term elections dominated global market moves in the second half of the week. The Democrats swept both chambers of Congress in a difficult night for the Trump administration, prompting the departure of the White House Chief of Staff at the end of the week.
Oil prices experienced their steepest weekly drop in months as the midterm result raised expectations of reduced US military engagement in the Middle East and potential de-escalation with Iran. Brent crude fell below US$100 at its lows before partially recovering to US$98.32 at Friday's close.
The initial equity reaction to the election result was positive, with US stocks rallying on Wednesday on signs of a less volatile policy outlook and reduced Iran war risk. Sentiment reversed sharply on Thursday, however, as the Nasdaq Composite sank -5.5%, the S&P 500 fell about -4.4% and the Dow dropped roughly 1,833 points, or -3.4%. All three indices posted their steepest one-day declines since the April 2025 tariff shock.
AI-linked technology shares led the decline, as investors grew concerned that the Democrats would impose tighter regulation on AI infrastructure and data centre development, triggering a broad rotation out of semiconductor and AI-linked stocks. The severity of the moves forced a reassessment of AI-linked positioning across equities, credit and commodities, with copper falling to its lowest since July on reduced data centre demand expectations.
The moves were amplified by underwhelming earnings outlooks from Apple, Qualcomm and ARM Holdings. By Friday, a partial recovery had emerged as dip buyers returned to chip stocks, though analysts cautioned that the rebound was driven largely by short-covering rather than conviction.
For the week, the S&P 500 fell -2.7% and the Nasdaq Composite dropped -3.4%. The MSCI Emerging Market Index ended -4.1% lower, while the KOSPI and Nikkei 225 plunged -11.7% and -9.3% respectively, on their high exposure to AI supply chains. Europe was a relative outperformer, with the Stoxx 600 finishing the week up around +0.2% and holding above its 200-day moving average.
The US dollar index initially weakened after the election, then rallied Friday after a stronger-than-expected October payrolls report. Nonfarm payrolls rose +165,000 in October, well above the +70,000 consensus, with a two-month net upward revision of +84,000. The American unemployment rate fell to 4.1%, against 4.2% expected, and average hourly earnings rose +0.4% on the month and +3.1% yoy.
Earlier in the week, the September JOLTS report had exceeded forecasts on both openings and quits. The ISM Manufacturing PMI came in at 55.5, above the 54.5 survey median, marking continued expansion, while prices paid eased to 75.2 from 77.9; similar trends were apparent in the ISM Services survey.
The Bank of England raised interest rates for the first time in three years, lifting the base rate by +0.25% to 4.0%, while Sweden's Riksbank raised rates from 1.75% to 2.00%.
Eurozone headline CPI accelerated to +4.0% yoy in October, up from +3.8% in September and the highest reading since September 2023 and exactly double the ECB's 2% target.
Both the Bank of England and the ECB are expected to raise rates again in December, along with the Federal Reserve and possibly the Bank of Japan.
Tuesday’s US CPI print will be the most significant data point this week, alongside Chinese trade data and the Australian monthly business and consumer surveys.
In geopolitics, New Zealand will learn the result of the weekend's election. At the same time, Gadi Eisenkot, leader of the centrist Yashar party, will attempt to form a government in Israel at the President's invitation, potentially replacing Benjamin Netanyahu. The COP31 Climate Summit also begins today in Antalya, Turkey.
ANZ, Aristocrat Leisure, Skydance, Softbank and Applied Materials all publish results this week, although the reporting calendar will be lighter than the last few weeks
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