The Monthly Review
October brought higher oil prices, weaker technology shares and a shift towards defensive investments. Explore the month’s market performance, South African developments and the indicators worth following.
Oil, gold and the rand
An oil shock met an AI repricing, and a single rotation produced both the month’s best index and its worst.
Oil prices rose as the conflict involving Iran disrupted confidence in energy supplies. Attacks on tankers in the Strait of Hormuz and a strike on a Saudi airport on 10/11 October kept supply concerns in focus. Brent gained 13.60% over the month.
Month-end to month-end change in spot gold, Brent crude, the dollar index and USDZAR. A rising USDZAR means a weaker rand. Source: Bloomberg, as at 31 October 2026.
For South Africa, higher oil prices and weaker gold prices created an uncomfortable combination: the country imports oil and exports gold. Alongside these moves, the rand ended October weaker.
Numoro’s regime model classifies South Africa as Disinflation / Deflation, with stress on Watch. It classifies the US, Eurozone, UK and Japan as Goldilocks, with volatility Elevated in the Eurozone and UK.
These are model classifications, not forecasts. In particular, the Goldilocks readings sit uneasily alongside the oil-price shock. Models may take time to reflect sudden market changes.
October’s market performance
Seven of the nine equity indices tracked declined in October, while two gained. The Swiss Market was the strongest performer and the NASDAQ the weakest. This was almost the opposite of September, when the NASDAQ led on enthusiasm for artificial intelligence.
Total returns in local currency, which removes currency-translation effects but is not directly comparable with older figures reported in US dollars. Source: Bloomberg, as at 31 October 2026.
As technology shares came under pressure, investors turned towards more defensive sectors, including healthcare. This helped support European markets, while technology-heavy indices such as the NASDAQ struggled.
Why technology shares fell
A key question in October was whether the money being invested in artificial intelligence will generate sufficient returns. That concern weighed on technology shares in the US and Asia and helped explain the preference for more defensive sectors in Europe.
Each index’s October 2026 total return less its September 2026 return, in percentage points, local currency; lime up, slate down. Source: Bloomberg, as at 31 October 2026.
Selling in chipmakers and AI infrastructure shares intensified around the middle of the month. September US consumer inflation of 3.7%, described in market commentary as higher than expected, added pressure to growth shares.
Later in October, Amazon and Intel results renewed questions about returns on AI investment. US technology futures fell sharply towards month-end.
The explanation is not entirely settled. It remains unclear how much of the decline reflected inflation and interest-rate concerns rather than company earnings, whether AI shares face a lasting setback or a change in valuation, and how much of the Swiss market’s gain reflected franc strength.
The broader European benchmark rose much less than the Swiss index. Numoro’s interpretation is that the types of companies within each index mattered more than the country in which the index was listed.
Market interpretation is not a forecast.
South Africa: mixed signals
South African inflation data presented two different pictures. September consumer inflation was lower than expected, while producer inflation was higher, driven by petroleum, chemicals and metals. That matters because rising costs for producers can eventually affect prices paid by consumers.
Year-on-year rates for September 2026, released in October 2026; actual in lime, consensus in slate, with the difference on hover. The PMI is left out: it is an index with no consensus. Source: Bloomberg economic calendar; Statistics South Africa.
The repo rate remained at 7.25%, with no South African Reserve Bank meeting in October. Governor Kganyago indicated that current policy settings should return inflation to target once the oil shock passes. Higher producer prices may test that assessment.
The medium-term budget introduced new fiscal rules and a domestic bond buyback. The finance minister said government debt had peaked. The borrowing requirement increased, mainly to fund the buyback, while bonds rallied on budget day.
The rand strengthened around budget day amid hopes of greater fiscal discipline, but those gains did not last. As oil rose and gold fell, the currency finished October weaker.
The JSE ended the month close to flat after September’s decline. The available sector figures indicate energy rose alongside oil while materials weakened with gold. These sector movements are shown as directions only because the figures do not reconcile to the overall index return.
Credit, volatility and bonds
A closer look at the indicators behind market performance.
Credit
US five-year credit default swap spreads widened to 79.8, their highest level since April 2026, while European spreads reached 74.8, their highest since March 2026. Numoro reads this as a sign that credit markets were reflecting growth concerns not fully apparent in European equity performance.
Five-year credit default swap spreads for the US and Europe, in basis points, over the full history of the series. Source: Bloomberg, as at 31 October 2026.
Volatility
Short-term volatility increased across all nine indices. In eight, the 30-day reading was higher than the 90-day reading. The largest increases were in Japan, Hong Kong and US technology shares.
Hover any point to see its September position and 30-day move. Source: Bloomberg, end-September and end-October 2026.
Rates
Ten-year government bond yields fell in all five markets tracked, despite higher oil prices. Numoro’s interpretation is that concerns about growth outweighed the inflationary effect of oil. US yields fell from a multi-decade high reached earlier in the month.
Change in benchmark ten-year government bond yields from 30 September to 31 October 2026, in basis points; lime up, slate down. Source: Bloomberg, as at 31 October 2026.
South African bond yields also declined. The budget supported the local market on the day, but the broader move was consistent with falling yields in the US, Germany and Japan.
What to watch next
The following dates and developments may help put the next market review into context. Central-bank expectations are not confirmed decisions.
The Bank of England meets on 5 November 2026. Its policy rate has remained at 3.75%, and economists surveyed by Bloomberg expect an increase.
The South African Reserve Bank meets on 19 November 2026. The question is whether higher producer inflation changes its assessment that current interest rates are sufficient.
The US Federal Reserve meets on 9 December 2026. In October it kept its upper rate bound at 4.00%, with some disagreement in favour of an increase. Officials have subsequently supported a gradual approach to further increases.
The European Central Bank meets on 17 December and the Bank of Japan on 18 December 2026. Economists surveyed by Bloomberg expect a final ECB increase, while markets price in more. Governor Ueda has signalled further increases in Japan.
The US midterm elections may influence fiscal and energy policy. October developments included a waiver of Russian energy sanctions intended to address diesel prices.
Oil flows through the Strait of Hormuz continued despite attacks, limiting some of the more severe supply scenarios. Whether shipments continue will influence how long the oil shock lasts.
Technology earnings will provide further evidence on whether October’s decline in AI-related shares reflected a lasting change in prospects or simply lower valuations.
The next review will assess how these developments unfold.