Global markets faced renewed pressure in October as high energy prices, persistent inflation and trade uncertainty weighed on investor sentiment and interest-rate expectations. Despite these headwinds, the global economy remained resilient, with continued growth in major economies and the IMF forecasting stronger global growth in 2027.
Nov 5, 2026
Introduction
Global equity markets declined over the month of October. High energy prices continued to stoke fears about inflation and expectations that central banks will need to keep raising interest rates this year. The AI trade lost some momentum during the month with companies highly involved in AI technology raising their capital spending while expressing caution that returns on investment may not be robust in the short term. Several companies’ sales outlooks were downgraded and/or missed estimates.
Economic data released in October demonstrated the resiliency of the global economy despite several risks that weigh on the outlook. The U.S. economy grew by 3.4%, annualized, in the third quarter of 2026, according to a preliminary estimate. Growth was driven by business spending, particularly for AI. China’s gross domestic product expanded by 4.5% year-over-year in the third quarter, a faster pace than the second quarter, and within range of Beijing’s 2026 target. Inflationary pressures accelerated as oil prices remained high with the conflict in the Middle East persisting. The U.S. Federal Reserve Board (Fed) and European Central Bank held their policy interest rates steady in October, while the Bank of Canada (BoC) raised its benchmark overnight interest rate to 2.50%.
In Canada, the S&P/TSX Composite Index advanced, led by the energy sector. Canada and the U.S. resumed trade talks, but a deal was not reached. There are hopes the two sides are getting closer to an agreement. U.S. equities finished lower. The price of gold declined. The price of oil rose about 15%. Yields on 10-year government bonds in Canada and the U.S. declined over the month.
