Technology shares came under renewed pressure at the start of the week as renewed selling hit semiconductor stocks, while oil prices stayed elevated on fresh geopolitical risk. With third quarter earnings season about to begin and September US inflation figures due midweek, investors are weighing concerns over Chinese semiconductor competition and AI investment returns.
How US markets closed on Monday
Wall Street finished Monday with a split result. The Dow Jones added 0.4%, while the S&P 500 ended slightly lower and the Nasdaq Composite lost 0.4%. Selling in chipmakers was the main drag on technology, and every one of the 20 weakest US companies with a market value above $200bn came from the technology sector.
Most other sectors finished in positive territory, which helped contain the decline. Energy, consumer staples and communication services led the gains. Meta advanced 3.4% after unveiling a new AI model, and Salesforce climbed 2.1% following an upgrade from a broker.
Oil, inflation and the week ahead for investors
Geopolitical risk lifts crude on Monday
Renewed tension in the Middle East and reports of Russian strikes on Ukrainian energy facilities pushed oil prices higher on Monday. WTI crude gained 1.5% to $93.22 a barrel and Brent rose 1.3% to $106.05. Higher energy costs continue to feed worries about inflation and the wider economic outlook.
Earnings season and US inflation data in focus
Third quarter reporting season begins this week, with major US banks releasing results alongside ASML and TSMC. These numbers should offer a clearer view of the financial sector and of demand linked to AI investment. The September US inflation report, scheduled for Wednesday, will be particularly important in shaping expectations for Federal Reserve policy.
Global market and economic update
Asian equities fall sharply on technology losses
Asian markets dropped steeply, with the MSCI Asia Pacific index down roughly 2%. South Korea’s KOSPI fell 7.2% and Japan’s Nikkei lost 2.7%. Technology stocks drove the decline on worries about competition from Chinese chipmakers and uncertainty over the returns on AI spending. SK Hynix, Samsung Electronics and Taiwan Semiconductor all moved lower.
US futures point lower ahead of bank results
US equity futures slipped overnight. Nasdaq 100 futures were down 0.8% and S&P 500 futures eased 0.2%, while Dow futures were up 0.2%. Technology names stayed under pressure for the same reasons seen in Asia, as investors also adjusted positions ahead of bank earnings and the US inflation release.
European shares extend gains for a second day
European equities rose for a second consecutive session on hopes for solid earnings. The Euro STOXX 50 added 0.4% and the STOXX Europe 600 gained 0.6%. Luxury stocks were firmer, with LVMH up 1.2% and Hermès rising more than 2%. Santander, BBVA and ING each advanced around 2%. ASML was an exception, falling 1.5% as AI infrastructure stocks weakened.
US dollar holds near its strongest level since April 2025
The dollar stayed close to its highest level since April 2025, supported by demand for safe-haven assets and expectations that the Federal Reserve will remain cautious. The euro was trading at $1.1172. Investors are waiting for US consumer and producer price data this week for further signals on the interest rate path.
Oil eases but supply risks remain
Oil prices moved lower, with Brent down 1.2% to $105.34 a barrel and WTI down 1.3% to $92.48, as markets anticipated higher Russian diesel exports. Prices nonetheless stayed high. Uncertainty over the proposed energy ceasefire between Russia and Ukraine, Houthi attacks on Saudi Arabia and tension around the Strait of Hormuz all continue to pose risks to supply.
IMF lifts its 2026 global growth forecast
The IMF raised its forecast for global growth in 2026 to 3.1%, citing strong AI investment, although higher oil prices tied to the Middle East conflict are weighing on the outlook. Growth is projected to slow from 3.5% in 2025 before picking up to 3.4% in 2027. The IMF cautioned that a drawn-out conflict, pressure on public finances and doubts over AI profitability could all weaken growth.
Eurozone bond yields edge lower
Government bond yields in the eurozone declined slightly as softer oil prices briefly eased inflation concerns. The German 10-year yield fell to 3.45% and France’s 10-year yield dropped to 4.85%. Concerns about the French fiscal deficit and the country’s political constraints remain, and geopolitical risk or further energy disruption could push yields higher again.
Fed’s Hammack favours early, smaller rate moves
Cleveland Fed President Beth Hammack argued for moving relatively quickly towards a restrictive policy stance, noting that inflation is broad-based and still above target. AI-related demand is adding to price pressures across several industries. Hammack expects inflation to take some time to return to 2% and prefers smaller, earlier rate adjustments to larger increases made later.
Company news and share price moves
The following companies saw their shares move on earnings, analyst ratings or other news.
AI and technology
Broadcom chief executive Hock Tan cautioned that AI investment is still speculative, as companies are spending heavily but finding it hard to generate returns. Despite OpenAI’s annualised revenue reaching $50bn, high costs keep it loss-making. Tan also raised the possibility of funding constraints, while the chief executive of Intel warned that memory chips could be one of the first segments to lose momentum.
Microsoft introduced its Maia 300 AI chip and may deploy more than one million units next year to support its AI services and the Azure cloud platform. Built with advanced chiplet technology, the chip is designed to deliver 40% more computing output per megawatt than leading GPU systems, part of a wider effort to reduce dependence on Nvidia.
Meta released Muse Wonder and Muse Wonder Full, which it describes as its most capable AI models to date, as it seeks to challenge OpenAI and Anthropic. The models will run its personal AI agent and coding tool, initially for subscribers. The launch is aimed at generating revenue from Meta’s large AI investment through subscriptions and at strengthening its market position.
Alphabet’s Google launched the Fitbit Edge fitness tracker at $180. The device offers better activity tracking, a replaceable battery and a larger display. It supports Google’s plan to grow subscriptions to Google Health Premium, which includes AI coaching and advanced health monitoring. Pre-orders are open ahead of the retail launch on 27 October, adding to competition with Apple.
IREN shares rose yesterday after reports that the company signed a multiyear cloud services agreement with AI company Anthropic. The deal supports the shift in IREN’s business from cryptocurrency mining towards AI infrastructure, placing it to benefit from rising demand for computing capacity. The stock had been down 6.8% for the year through Friday.
Global smartphone shipments dropped 20% year on year in the third quarter, the weakest result for that period since 2012. Higher memory chip costs and supply shortages pushed up device prices. Samsung kept its position as market leader, followed by Apple, while Xiaomi, OPPO and vivo all recorded steep declines. The outlook for the sector remains difficult.
Consumer, retail and luxury
LVMH posted third quarter results below expectations, with organic sales up 1% as demand in China weakened. Sales in fashion and leather goods fell 5%. Sales in Asia also declined 5%, while US sales rose 5%. The figures point to continuing difficulties for the luxury sector as consumer spending stays subdued and economic uncertainty persists.
Frasers Group lifted its holding in Burberry to 7.42%, up from the 6.32% it disclosed on 30 September, a sign of increasing interest in the luxury brand. The retailer, controlled by Mike Ashley, is building its luxury presence after acquiring Harvey Nichols and pursuing Hugo Boss, and is also looking at expanding Flannels into Europe.
Starbucks ruled out a takeover of Chipotle, dismissing recent speculation about a potential deal, and reiterated its focus on its turnaround plan. Chipotle shares fell as hopes of a deal faded. Investors and analysts had already questioned the logic of such a move, given the ongoing recovery at Starbucks and the financial risks of a large acquisition.
Kroger plans to reduce its corporate workforce by about 3,000 roles, or 37% of corporate staff, over the next three years. Chief executive Greg Foran aims to simplify the business, lower overheads and improve efficiency. The savings will go towards lower prices, better in-store experiences and frontline employees, with AI also helping to modernise operations.
Healthcare
Bristol Myers Squibb announced positive Phase 3 results for two treatments. RYZ101 delivered a significant improvement in progression-free survival for patients with neuroendocrine tumours, and admilparant improved lung function in patients with idiopathic pulmonary fibrosis. The company intends to begin discussions with regulators and expects further trial data in progressive pulmonary fibrosis in early 2027.
Trade, politics and financial stability
China and the EU reached an agreement to limit exports of Chinese hybrid vehicles, which could see tariffs replaced by quotas or price restrictions. Chinese hybrid exports to the EU tripled year on year to $7.5bn in the first half of 2026. Chinese brands now hold more than a quarter of the European plug-in hybrid market, increasing competition for European carmakers.
Elon Musk has spent about $366 million backing Republican candidates in the 2026 US midterm elections, including $276 million since July. His funding is aimed at Senate and House contests as Democrats gain ground. The spending reflects what is at stake for his businesses, as Democrats have threatened to investigate his government contracts and his role in the public sector.
The IMF highlighted heightened risks to financial stability from a possible AI-driven sell-off, rising government bond yields and cyberattacks. It warned that stretched valuations, increasing leverage in the AI sector and high levels of government debt could magnify market shocks. Banks are broadly resilient, but stress tests found capital weaknesses across 22% of global banking assets.
Analyst ratings and outlook changes
Goldman Sachs moved to overweight on equities on a three-month view and upgraded bonds to overweight on a 12-month view, pointing to better valuations ahead of third quarter results. The bank expects steady growth and easing inflation to support markets and prefers equities to credit. It added that geopolitical tension, interest rate volatility and the US midterms are likely to keep markets volatile.
Bank of America upgraded Salesforce to Buy from Underperform and raised its price target to $285 from $160. The bank believes AI will make enterprises more reliant on Salesforce platforms rather than replace them. AI revenue is still modest and adoption remains a risk, but larger deal sizes and stronger performance from Slack support higher revenue growth forecasts.
Evercore ISI started coverage of Robinhood with an Outperform rating and a $130 price target. The broker pointed to the company’s widening range of financial services, strong user experience and the potential to grow deposits by more than 20%. Prediction markets, international expansion and blockchain services could provide further sources of growth.
Truist Securities upgraded First Solar to Buy from Hold and lifted its price target to $270, expecting firmer US solar panel pricing into the 2030s. New import tariffs and pricing restrictions should benefit domestic producers. Truist also increased its 2029 revenue and EBITDA estimates, citing the cost competitiveness of First Solar and its strong order book.
Wells Fargo downgraded Adobe to Underweight and cut its price target to $225, citing competition from AI, weaker growth prospects and a smaller share of customer budgets. It upgraded Tyler Technologies to Overweight with a $400 target, pointing to its resilience against AI disruption. Wells Fargo also raised its targets for Palo Alto Networks and CrowdStrike, expecting cybersecurity spending to benefit in 2027.
Raymond James upgraded T-Mobile to Outperform from Market Perform with a $170 price target. The broker sees concerns about competition from SpaceX as overstated, given the spectrum and network advantages of established operators. Strong subscriber growth and expected market share gains support its view, although T-Mobile trades at a premium valuation.
Deutsche Bank upgraded AST SpaceMobile to Buy from Hold and kept its price target at $93. The bank views the recent sell-off as unjustified, arguing that spectrum assets make up almost all of the company’s enterprise value. Possible progress on a partnership with T-Mobile and rising competition between SpaceX and US telecom operators could benefit the satellite connectivity business.
Deutsche Bank also began coverage of Interactive Brokers with a Buy rating and a $102 price target, implying upside of around 18%. It pointed to the platform’s low costs, access to 170 markets and high level of automation, which support operating margins of 75% to 80%. The bank expects earnings growth in double digits to continue through 2027.
Upcoming data and events
Tuesday’s economic calendar includes the US NFIB Business Optimism Index, existing home sales and the monthly budget statement, along with speeches from several Federal Reserve officials and ECB President Lagarde. China releases September figures for inflation, imports, exports and the trade balance. Key US earnings come from JPMorgan Chase, Goldman Sachs, Wells Fargo, Citigroup, Johnson & Johnson and UnitedHealth.
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