5 – 9 October 🗓️
🏦 Macro
Markets spent this week balancing two competing forces: persistent inflation concerns and renewed optimism surrounding large-cap technology stocks. Rising energy prices, government borrowing needs and expectations of tighter monetary policy kept global bond markets under pressure.
On Monday, weaker U.S. employment data reduced expectations of an immediate Federal Reserve rate hike, but investors remained cautious as Treasury yields stayed near multi-year highs. Geopolitical uncertainty surrounding the US – Iran conflict continued to complicate the inflation outlook and on Friday, Donald Trump said the United States would not attack Iran before next month’s midterm elections, easing some immediate concerns about energy supplies.
📈 Equities
Technology stocks led the initial advance. On Monday, the Nasdaq reached a record high, supported by gains in Nvidia, Meta and Microsoft, while the S&P 500 rose (approximately 0.7%).
Momentum weakened later in the week. On Thursday, the S&P 500 fell 0.5% and Nasdaq dropped 1.3%, with AI-related stocks including Nvidia, Broadcom and Micron under pressure. Concerns about the enormous cost of AI infrastructure and rising financing costs challenged investors’ enthusiasm.
Friday brought a partial recovery, with technology shares helping U.S. markets advance again. Investors also turned their attention to the third-quarter earnings season, which begins next week with major U.S. banks.
💱 Bonds & FX
Government bonds remained under pressure as markets assessed elevated energy prices, persistent inflation and heavy government debt issuance.
The dollar strengthened early in the week, supported by rising U.S. yields and concerns about France’s fiscal outlook. The euro touched a 17-month low against the dollar and remained on course for a fifth consecutive weekly decline. These moves highlighted the growing divergence between the perceived resilience of the U.S. economy and Europe’s fiscal challenges.
🛢️ Commodities
Oil remained the main geopolitical pressure point. Brent crude fell to approximately $100.32 per barrel on Monday as Middle Eastern exports increased and G7 countries pledged to boost supplies. However, renewed supply concerns drove prices higher later in the week, with Brent climbing above $104 on Thursday.
Friday’s easing in geopolitical concerns provided some relief. Gold also recovered, rising more than 1% to approximately $4,189 per ounce, supported by a softer dollar and lower oil prices. Nevertheless, elevated bond yields continued to complicate the outlook for precious metals.
🗺️ The big takeaway
Technology stocks can continue to benefit from strong AI investment, but rising yields make future earnings less valuable today and increase the cost of financing new infrastructure. Meanwhile, oil prices remain a potential source of renewed inflationary pressure.
The week demonstrated how quickly sentiment can change: record highs early on, a technology-led sell-off midweek, and a recovery on Friday. With major bank earnings approaching, investors will be looking for evidence that corporate profitability can justify elevated valuations despite higher borrowing costs. 🔍
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