AI spending fears and Gulf strikes drive investors from stocks into bonds..
This week @ 15:28 pm Friday 23rd October in London.
Markets:
- FTSE 100 fell 1.44% this week to 10,725.03, as banks and miners led Monday’s declines, with a report of a Bank of England probe into Barclays and fresh Middle East tensions weighing on sentiment, and Antofagasta, Fresnillo and Anglo American leading the losses on Thursday.
- S&P 500 fell 0.38% this week to 7,630.33, as a technology rout and Middle East risks pushed investors towards bonds, after Meta’s plans to boost capital spending revived fears that tech firms will issue more debt to fund the AI buildout.
- Nasdaq Composite fell 0.56% this week to 25,993.605, with a near 7% plunge in chipmakers sending the Nasdaq 100 to its worst day since June on Thursday
- STOXX Europe 50 fell 1.94% this week to 5,299.13, as escalating civil unrest in France and anxiety over the debt needed to fund AI infrastructure triggered a retreat across European chipmakers including ASML and Infineon.
Bonds:
- UK 10-year gilt yields rose 1.6bps this week to 5.37%, as investors weighed stronger-than-expected inflation and rising public borrowing ahead of next week’s Budget and the Bank of England’s 5 November meeting.
- US 10-year Treasury yields fell 8.27bps this week to 5.00%, as AI funding worries drove investors into bonds, with Treasuries posting their biggest single-day rally in more than three years and traders reducing bets on another Federal Reserve rate hike in 2026.
Commodities:
- Brent crude rose 5.49% this week to $115.89/bbl, its highest level in over five months, as escalating Houthi attacks on Saudi targets and reports of possible renewed US strikes against Iran raised supply risks.
- Gold fell 3.42% this week to $4,038/oz, heading for its steepest weekly decline in over four months as elevated oil prices bolstered higher-for-longer interest rate expectations.
- Copper fell 1.27% this week to $6.49/lb, as inventories on the London Metal Exchange surged and the sell-off in AI-related stocks sapped risk appetite.
FX:
- GBP/USD rose 0.38% this week to 1.3380, as strong inflation data cemented expectations of a Bank of England rate hike in November, making sterling one of the stronger major currencies this week.
- GBP/EUR rose 0.74% this week to 1.19465, supported by expectations of higher Bank of England interest rates and growing concerns about European government debt.
Macro
- UK CPI rose to 3.5% in September from 3.1% in August, above the 3.4% forecast, with core inflation picking up to 2.8% from 2.6% and public debt surpassing £3 trillion.
- UK retail sales volumes dropped 0.4% in September, a bigger decline than the 0.1% fall expected, while the GfK confidence index plunged 11 points to -24 in October, its biggest monthly fall since April 2020.
- France flash PMI figures revealed an unexpected contraction in private-sector activity, and government borrowing costs reached their highest since 2002.
- Middle East Houthi militants claimed attacks on Saudi Arabia’s Red Sea port of Yanbu, along with strikes on an oil field and an airport, while US officials told The New York Times that the US and Israel have plans for fresh strikes on Iran after the midterm elections.
Company news:
- Lockheed Martin Q3 sales of $20.7 billion topped estimates, with a record $292 billion backlog supporting raised full-year guidance; shares rose 9% on Thursday.
- RTX Q3 sales of $25.0 billion rose 11%, adjusted EPS rose 33% to $2.26, and the company raised its 2026 outlook for adjusted sales, adjusted EPS and free cash flow.
- Northrop Grumman Q3 sales rose 7% and backlog reached a record $110 billion, prompting higher 2026 earnings guidance.
- Intuitive Surgical Q3 revenue rose 22% to $3.05 billion, but shares fell as management quantified an instrument price cut and disclosed a $450m antitrust settlement.
- Danaher reported adjusted Q3 earnings of $2.11 a share on revenue of $6.6 billion, beating expectations, though shares fell in pre-market trading.
- Rolls-Royce shares fell on Friday as the company reportedly neared a deal for up to £200 million in UK government subsidies to develop a new short-haul aircraft engine.
What we will be keeping an eye on next week…
w/c 26th October 2026
- 27 October: HSBC Q3 results and Coca-Cola Q3 results before the US open.
- 28 October: UK Autumn Budget, Chancellor John Healey’s first, and the Federal Reserve decision, with Microsoft, Alphabet, ServiceNow and T-Mobile reporting after the close.
- 29 October: ECB rate decision and US GDP and PCE data, plus Shell Q3 results and Caterpillar Q3 results.
- 30 October: Bank of Japan rate decision and AstraZeneca results before the open.
Enjoy the weekend
Markets move constantly and the numbers in this update will change. This is a snapshot only, pulled together from a range of sources, and is meant as a quick guide rather than a precise record. It’s not investment advice and shouldn’t be used to make trading or investment decisions. If you need more accurate or specific data over a defined period, please get in touch with a member of the team who will be happy to help.
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This article is for information only and does not constitute advice or recommendation and you should not make any investment decisions based on it. The views and opinions of this article are those of Casterbridge at the time of writing and may change without notice. Any opinions should not be viewed as indicating any guarantee of return from investments managed by Casterbridge nor as advice of any nature. It is important to remember that past performance and the value of an investment, and any income from it, may go down as well as up and the investor may not get back the original amount invested.