Blog week ending, 16th October 2026
Markets:
- Global equity markets were weaker over the week, led by a sharp sell-off in technology and AI-related stocks after hotter-than-expected US inflation data fuelled expectations of further interest rate hikes.
- The S&P 500 and Nasdaq recorded their biggest one-day falls since July on Wednesday, with the Nasdaq now down more than 4% from the record high it reached the previous week. The sell-off also spread to Asia, led by memory chipmakers.
- The ASX 200 held up better than offshore markets as investors rotated into banks and defensive stocks, although the materials sector fell almost 4% on Thursday to its lowest level since late July.
- US Treasury yields fell over the week as investors sought safety from the AI sell-off, with the 10-year yield falling to 5.07% on Thursday after briefly spiking to 5.32% following the inflation data. Australian bond yields also eased, with the 10-year yield falling to 5.23% after weaker-than-expected jobs data.
- In local stock news, Blackstone-backed data centre operator AirTrunk delayed its planned US$1.5 billion Singapore REIT IPO until next year, citing market volatility and higher interest rates. The delay followed the withdrawal of Firmus’ ASX float the previous week.
- Glencore made its debut on the ASX. Unlike its larger peers, Glencore has no iron ore exposure, with around a quarter of its earnings coming from coal and another quarter coming from its marketing and trading arm.
- Pressure on Australia’s private credit sector continued to build, with major investment banks, including Goldman Sachs and UBS, reportedly becoming more selective in lending to private credit funds.
- Oil prices remained elevated, with Brent crude trading around US$105–106 a barrel and on track for a second consecutive weekly gain as attacks on shipping in and around the Strait of Hormuz intensified. This was partly offset by the release of emergency oil reserves and reports that the US was considering easing sanctions on so-called shadow fleet vessels.
- The Aussie dollar briefly rose back above US70 cents before easing to around US69.5 cents following the weaker-than-expected jobs data.
Economy:
- Australia’s unemployment rate held at 4.7% in September, its highest level since October 2021 and above expectations of 4.6%, as employment unexpectedly fell by 39,300 compared with expectations of a 20,000 gain. Part-time employment fell 73,700 while full-time employment rose 34,400, and the participation rate fell to 66.8%.
- Minutes from the RBA’s September meeting were more hawkish than expected, with a clear focus on upside risks to inflation. The Board signalled a greater tolerance for slower growth and higher unemployment in an environment of persistent supply shocks, in contrast to the Governor’s more dovish press conference.
- Australian business confidence fell 4 points to -13 in September, its third consecutive monthly decline, leaving it in the bottom 5% of readings in the survey’s history. Higher interest rates, global uncertainty and elevated fuel costs weighed on sentiment, while the employment index fell to its lowest level in five years.
- US annual CPI inflation rose to 3.7% in September from 3.4% in August, above expectations of 3.6%. Core inflation rose to 2.6% from 2.4%, also exceeding expectations, while gasoline prices accounted for more than half of the monthly increase.
- US producer prices rose 1.3% in September, the largest monthly increase since March 2022 and well above expectations of 0.5%, taking annual producer price inflation to 6.3%. Core producer prices rose 0.7% over the month.
- US consumer sentiment fell to 46.3 in early October, well below expectations, with the current economic conditions index falling to a record low. Year-ahead inflation expectations rose to 4.7% from 4.6% as frustration over the cost of living continued to mount ahead of the midterm elections.
- The UK economy grew 0.1% in August, defying expectations of a 0.1% contraction and lifting annual growth to 2.1%, its strongest pace since October 2022. Despite this, the UK 10-year gilt yield rose to 5.46% during the week, close to its highest level since 2007 ahead of Chancellor Healey’s 28 October Budget.
- China’s exports rose 36.3% in September compared with a year earlier, their fastest pace since February and well above expectations, supported by strong global demand for AI-related goods. China’s monthly trade surplus rose to its highest level since January 2025.
- China’s producer price inflation rose to 5.0% in September, its highest level in four years and above expectations of 4.4%, driven by higher energy costs. Consumer price inflation edged up to 0.9% from 0.8%, slightly below expectations.
Politics:
- Yemen’s Houthis escalated attacks on Saudi Arabia, with a missile strike on Riyadh’s King Khalid International Airport killing at least 13 people and injuring more than 300. It was the deadliest attack on Saudi Arabia in more than a decade. The Iran-backed group also claimed responsibility for an attack on Saudi Aramco’s headquarters.
- President Trump said his administration would make a decision on Iran very soon while maintaining that US forces would not attack Iran before the 3 November midterm elections.
- President Trump struck a deal with Russian President Putin to release Russian diesel into global markets, with the US Treasury waiving sanctions on Russian diesel until April 2027. The deal drew criticism from European leaders, while an accompanying Russia–Ukraine energy ceasefire was breached within days.
- The Australian Government introduced legislation requiring LNG exporters to reserve a portion of their production for the domestic market as the east coast faces a potential gas shortfall later this decade. Producers warned that the move could discourage investment in new gas fields.
This information is general advice and does not take account of investors’ objectives, financial situation or needs. Before acting on this general advice, investors should therefore consider the appropriateness of the advice having regard to their objectives, financial situation or needs.
Written by Christopher Lioutas
Chairman – Harbourside Investment Management
