The Month in a Minute
October brought a change in market fortunes, as investors questioned AI spend. Tech and chip stocks fell, dragging on US and Asian markets. However, UK and European shares held firm, defensive sectors performed well, and government bonds bounced back.
AI enthusiasm cools, diversification steps up
Investors took a closer look at AI spending in October; Big Tech results raised questions about whether huge investments would deliver predicted returns, while higher borrowing costs added pressure.
Chipmakers took the biggest hit, weighing on the tech-heavy Nasdaq, while the Dow Jones – which tracks 30 major US companies – rose. Software stocks also held up better.
Asia and emerging markets felt the biggest impact, particularly South Korea and Taiwan, where tech stocks tend to dominate. Chinese competition added to the pressure, while Brazilian shares fell following an unexpected presidential election result.
There were brighter spots, too.
The UK was among the strongest major markets, helped by its energy and defensive sectors. The Chancellor's Autumn Budget brought very few surprises for investors and had little market reaction as a result.
European shares also held up, although concerns over France's finances weighed on banks. Energy led global sectors, with healthcare, utilities, and consumer staples also performing well.
Bonds recovered after a difficult September, helping cushion falls in shares.
Meanwhile, the US Federal Reserve and European Central Bank held interest rates steady, although further US rate rises remain possible. Tensions in the Middle East also escalated, with increased attacks on shipping in the Strait of Hormuz pushing oil prices higher.
All in all, October showed why diversification matters: while tech lost its shine, bonds and other parts of the market held firm.
Investing gives your money the opportunity to grow over the long term, although returns can rise and fall with market conditions. Tax treatments depend on your individual circumstances and may change.
