Contents
Market review
Equity markets moved lower over the week while bond markets were mixed. Higher oil prices and renewed concerns around artificial intelligence (AI) weighed on equities over the week. Meanwhile, investors moved into UK Gilts and US Treasuries as risk-off sentiment emerged while French government bonds came under pressure once again.
Some of the world’s largest companies reported earnings for Q3. SpaceX shares surged +8% after it showed strong results with revenue climbing 161% to $14.6bn for Q3 2026 and net income came in at $4.4bn, up from a loss of $1.1bn a year earlier. High margin AI revenue from renting out compute helped the company post a profit. Meta beat revenue estimates with overall revenue coming in at $64.6bn for Q3. However, its share price fell over the week as investors became concerned about its increased AI spending plan and that the company spent more cash than it generated over the quarter. Tesla reported profit above expectations and cut its AI spending plan for the year. The stock fell on the news as well showing how elevated investors’ expectations are around AI amid general risk-off sentiment.
10-Year US Treasury and UK Gilt yields fell over the week as investors moved into safe-haven assets due to concerns around AI spending and its potential to weigh on future growth. Meanwhile French government bonds were under pressure once again, with concerns over government finances compounded by widespread protests and political uncertainty. The French 10-year bond yield rose to 5.1%, its highest closing level since 2002, as investors demanded a higher return for lending to the French government.
In the UK, unemployment fell to 4.7%, below expectations of 4.9%, while September inflation came in at 3.5%, slightly above the 3.4% expected. Investors now assign a 95% chance that the Bank of England will hike interest rates by 0.25% in November.
The week did see positive economic data from China. Its economy grew by 4.5% over the year in Q3, which was slightly ahead of expectations of 4.4%. Growth was helped by resilient exports, particularly AI-related components and other high-tech goods. Retail sales, which measure spending in shops and online, grew by 1.1% year-on-year in September, more than double expectations of 0.5%.
Outlook
The broader backdrop remains constructive, but near-term dynamics are increasingly driven by central bank policy, incoming data, and the resilience of corporate fundamentals. Markets remain reactive to geopolitical flare-ups and the potential for inflation tail risks. More hawkish policy responses, particularly from the Fed, may tighten financial conditions and drive intermittent volatility. Encouragingly, structural growth drivers remain intact, with earnings expectations broadly resilient and corporate balance sheets holding up despite a renewed focus on funding costs in lieu of a higher interest rate environment.
Movers table
Equities |
1 Week |
YTD |
1 Year |
|---|---|---|---|
S&P 500 |
0.06% |
12.98% |
15.05% |
FTSE 100 |
-1.79% |
10.50% |
15.09% |
Euro Stoxx 50 |
-2.42% |
6.61% |
9.20% |
MSCI Asia Pacific ex Japan |
-2.45% |
14.26% |
15.52% |
MSCI China |
-5.55% |
-18.59% |
-22.13% |
Source: Bloomberg as at 09:00am on 23/10/2026.
This content has been prepared by M&G Life Investment Office (LIO) for information purposes only and does not contain or constitute investment advice. Information provided herein has been obtained from sources that LIO believes to be reliable and accurate at the time of issue but no representation or warranty is made as to its fairness, accuracy, or completeness. The views expressed herein are subject to change without notice. Neither LIO, nor any of its associates, nor any director, or employee accepts any liability for any loss arising directly or indirectly from any use of this document. The value of investments and any income from them may go down as well as up and are not guaranteed. Investors may get back less than the original amount invested and past performance information is not a guide to future performance.
‘M&G Life Investment Office (LIO)’ includes the team formerly known as Prudential Portfolio Management Group (PPMG), Prudential Portfolio Management Group Limited, is registered in England and Wales, registered number 2448335.
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