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Investment Update November 2026
October brought a change of pace. Technology stocks lost ground as UK and European markets pulled ahead. America remains a driver of growth, but weak job creation, rising prices and political uncertainty demand attention. For us, the AI story is far from over. The challenge is to build the power and infrastructure it needs, while giving investors’ confidence that the investment will pay off.
In the United States, the leading benchmark index the S&P 500 fell 0.9% in October, seasonally renowned as a difficult month and the technology rich Nasdaq 100 index dropped 6.7%, as an AI and semiconductor sell-off reversed September’s tech leadership. Beneath the index, rotation favoured defensives, with utilities, consumer staples and healthcare performing strongly as investors and hedge funds particularly cut exposure to AI. The S&P 500 remains up around 12% year to date, in line with its longer run average annual return profile. For us, the differences between the dot.com bubble and the AI phenomenon are stark. The growth in capability and take up of AI is quite astonishing. Built on digital infrastructure the biggest question seems to be the delivery of reliable power and memory infrastructure to keep pace with developments.
The US economy grew by 3.4% including inflation and by 5.6% in nominal annualised terms in Q3 2026, beating expectations. This supports the point we have consistently made that America is driving global growth. That said, the latest GDPNow “nowcast” does point to a modest slowdown in growth, job creation remains weak and inflationary cost push pressures persist, thanks largely to the war with Iran. The quarter 3 corporate earnings results are strong, but not as strong as the previous quarter. Any slippage is punished by the stock market.
September payrolls rose just 29,000, below the 90,000 forecast, while earlier figures were revised down and unemployment reached 4.2%. Inflation rose to 3.7%, outpacing wage growth of 3.0% and reducing purchasing power. The Fed held rates at 3.75%–4.00% on 28 October, with two members favouring a rise. The 10-year Treasury yield ended October at 4.93%, down from 5.29% in September, as stocks fell and the labour market weakened. Risks from fiscal policy remain unresolved.
The US midterm elections take place on 3 November, and forecasts favour the Democrats. If they win control of Congress, they could limit the President’s ability to pass laws and spending plans. A so-called “lame duck” President Trump is not a concept easily reconciled, however.
Meanwhile, UK and European stocks outperformed the US. The FTSE 100 rose 1.2% to 10,729, helped by energy companies, despite weaker UK consumer confidence. The Bank of England meets on 5 November, with three policymakers already favouring a rate rise. Europe’s STOXX 600 gained 1.9% to 646.76 as investors moved away from US technology stocks. The European Central Bank held its deposit rate at 2.50% and its marginal lending rate at 2.90% on 29 October, following increases in June and September. Inflation remains above target, while French borrowing costs are rising. We note Mrs Lagarde, Head of the ECB will leave the role shortly. Economic and fiscal weakness across the EU (notable in France) has not yet played out in the stock market as many of the leading firms are supported by global earnings. However, the once mighty German automotive firms have fallen from their zenith. For example, the top 3 German automotive brands combined are 13 times smaller than Tesla in terms of their market capitalisation.
Japanese shares fell in October, led by selling in technology and semiconductor stocks. The broad TOPIX index declined 3.5% in yen terms but remained up approximately 15.7% for the year to 30 October in sterling terms. The Bank of Japan held its interest rate at 1.25% during the month. Governor Ueda has signalled further increases towards an equilibrium level that neither stimulates nor slows the economy. Markets see roughly a 75% chance of a rate rise in December, while the yen trades at a level that remains stimulative for exporters.
China’s economy grew 4.5% in the third quarter, slightly above the 4.4% forecast. Growth for the year to date was 4.6%, within the government’s 4.5%–5% target. Exports and manufacturing remain the main drivers, while consumer spending and property are weaker. Industrial output rose 5.5% in September, but retail sales increased just 1.1%, and property investment is down more than 20%. This points to an uneven recovery, with households spending cautiously. We expect the People’s Bank of China to put more money into the financial system to support the economy and investment markets. Chinese equities across the various exchanges have performed weakly for some time.
Gold and silver fell in October despite worsening conflict in the Gulf. A strong dollar and high inflation-adjusted bond yields made precious metals, which pay no income, less attractive after last year’s sharp gains. Gold-mining shares fell even more, with a major gold-miners fund dropping 5% on the final Friday of the month. Oil moved in the opposite direction: Brent crude ended the month at $117 a barrel after the Strait of Hormuz was declared closed. This suggests investors were more concerned about disrupted oil supplies than seeking safety in gold. As we have noted before, disruption in the Strait of Hormuz could affect commodities and related products for some time. This may push prices higher, but selective investment could offer opportunities.
At the portfolio level, our planned move from longer-duration fixed-income investments into money market funds continued to deliver benefits. Diversification across asset classes, including alternatives and commodities, has supported returns and reduced overall volatility. Energy, technology and companies benefiting from technological advances have provided much of the positive momentum in 2026. We look forward to a more positive run-up to the year-end, with portfolios positioned to capture gains.
As ever, we thank our investors and their advisers for their support and welcome any questions you may have.
Written by the Alpha Beta Partners Investment Team.
All sources Bloomberg unless otherwise stated.
