AI sell-off drags the Nasdaq lower as the FTSE 100 climbs to its best close since August
This week @ 15:32 pm Friday 16th October in London.
Markets:
- FTSE 100 rose 2.73% this week to 10,840.35, as its limited exposure to technology stocks helped shield it from the AI-driven sell-off, while a surprise return to UK growth, a rally in pharmaceutical and consumer staples heavyweights and falling gilt yields lifted it to its highest close since late August.
- S&P 500 fell 0.96% this week to 7,736.5, posting its biggest one-day fall since July on Wednesday after hotter-than-expected consumer inflation fuelled expectations of further Fed rate hikes.
- Nasdaq Composite fell 3.15% this week to 26,503.94, as CoreWeave’s bond yields touched 15%, fuelling anxiety about heavy AI debt; 20 of the most valuable global AI and semiconductor stocks shed more than $1 trillion in value over the week.
- STOXX Europe 50 rose 2.01% this week to 5,411.69, as investors switched out of the AI trade and positive earnings news supported the region, putting European shares on course for their best weekly performance since August.
Bonds:
- UK 10-year gilt yields fell 9.3bps this week to 5.36%, reaching a three-week low as a global equity sell-off renewed appetite for government bonds.
- U.S. 10-year Treasury yields fell 15.2bps this week to 5.09%, despite sharper-than-expected inflation data, in what appeared to be a flight to safety amid geopolitical tension, with yields failing to hold above 5.30% after the CPI report before retreating sharply.
Commodities:
- Brent crude rose 0.76% this week to $105.52/bbl, supported by continued attacks on ships around the Strait of Hormuz and a larger-than-expected draw in US crude stockpiles, partly offset by the IEA’s pledge to release the remaining 100 million barrels under its March agreement.
- Gold fell 0.25% this week to $4,205.60/oz, having slumped to its lowest since 7th October after hot US CPI data spurred rate hike concerns, before bouncing as Treasuries rallied and Fed Chair Warsh offered no indication of an October hike.
- Copper fell 1.14% this week to $6.6155/lb, as hotter-than-expected US inflation revived talk of another Fed rate hike, the Asian chip-stock rout spread to metals, and a deal at Escondida removed the most immediate supply risk.
FX:
- GBP/USD rose 0.74% this week to 1.3333, helped by a weaker dollar and a UK growth surprise that reinforced expectations of a possible Bank of England rate increase next month.
- GBP/EUR rose 0.30% this week to 1.18485, as euro sentiment remained fragile on French fiscal concerns, while sterling was supported by expectations of a November Bank of England hike.
Macro
- US September CPI rose 0.6% m/m and 3.7% y/y, against estimates of 0.6% and 3.6%, driven largely by energy prices linked to the US-Iran war. Core PPI rose 0.7% m/m against expectations of 0.3%, while headline PPI jumped 1.3%.
- UK GDP rose 0.1% in August, against expectations of a 0.1% contraction, and grew 0.7% over the three months to August.
- Federal Reserve Chair Warsh reiterated the commitment to price stability at the IMF meetings in Bangkok but declined to indicate how policymakers might vote on 27 to 28 October; traders now price an 87% chance of a hold.
- Bank of England: 54 of 63 economists polled now expect a hike to 4.00% in November.
- Middle East: US Central Command confirmed that a container ship that sank in the Strait of Hormuz this week was struck by an Iranian projectile.
Company news:
- JP Morgan Q3 EPS of $5.57 came in below the FactSet estimate of $5.93, with revenue up 8% to $50.9 billion; the shortfall reflected weaker fixed income trading and rising expenses.
- ASML Q3 net sales of €11.7 billion, a 57.5% gross margin and €5.0 billion net income, with Q4 sales guided at €14.2 billion to €15.2 billion. Shares declined despite results beating expectations.
- Schneider Electric raised its full-year outlook after a 17% jump in Q3 revenue on growing data centre demand.
- LVMH Q3 revenue of €18.5 billion, up 1% organically and in line with expectations, with Fashion and Leather Goods down 5% organically as the division was affected by slowing demand in China.
What we will be keeping an eye on next week…
w/c 19th October 2026
- Monday 19th October: China Q3 GDP, forecast at 4.4%, alongside September activity data.
- Tuesday 20th October: UK labour market report, plus results from RTX and Northrop Grumman before the open, and Intuitive Surgical and Netflix after the close.
- Wednesday 21st October: UK CPI, the last reading before the Bank of England’s 5 November decision; inflation rose to 3.1% in August.
- Friday 23rd October: UK retail sales and S&P Global flash PMIs for Germany, the Eurozone, the UK and the US.
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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