Εβδομαδιαία Επισκόπηση: Διεθνής Οικονομία & Αγορές, 10/11/26
Elevated volatility in the global Technology equity sector persists
The global Technology equity sector suffered heavy losses in the past week. The MSCI ACWI Information Technology (IT) index fell by -8.3% wow, with cumulative losses of -18.3% compared with recent record highs on October 6th, entering correction territory (>10% losses from recent peaks).
Having said that, the MSCI ACWI IT entered the current week with a partial recovery (+3.0% on November 9th), while still being close to +200% compared with 4 years ago, when ChatGPT was released, marking the start of the generative Artificial Intelligence (AI) revolution.
Notably, the past week’s sell-off did not feed through to a broader equity downturn. In the event, relatively less tech-heavy equity bourses held their ground, with the EuroStoxx up by +0.8% wow.
Concerns regarding the sustainability of strong returns on massive capital investment, particularly regarding AI and of hefty profit margins remained center-stage.
In addition, some considerations gained some fuel, regarding if and to what extent the impetus in the development of AI data centers in the US, could be affected by the results in the US “mid-term” elections. Recall that AI data center development has drawn some civilian backlash, although it should be noted that respective concerns have been bipartisan.
The results in the US “mid-term” elections were overwhelmingly positive for the candidates supported by the Democratic Party, both at the federal (legislature) and the State (legislature as well as Governors) level. Regarding the federal legislature (Congress), which is bicameral, the majority in both the House of Representatives and the Senate flipped in favor of the Democrats.
US President Trump commented that the war on Iran and the public discontent from the subsequent spike in energy costs inflicted a heavy toll on the election results of Republican-backed candidates.
As a result, international prices of major energy commodities fell sharply (Brent crude oil: -16% wow and further by -6% on Monday November 9th to $92.6/barrel, the lowest since the end of past August) on investors’ hopes that the probability of an escalation in the Iran conflict may have eased. It should also be noted though that even if a renewed escalation is avoided, signs of a prospective restoration of smooth flows through the Strait of Hormuz remain elusive.
On the economic data front, the US labor market report for October was stronger than expected, with nonfarm payrolls net gains of +165 thousand (“k”), vs consensus for +65k and with the readings in the previous 2 months being substantially revised up by +84k (3-month average of +137k vs a monthly average of +89k since 2000). The unemployment rate fell by -0.1 pp mom to 4.1%, while the annual growth of average hourly earnings stood at +3.1%, roughly in line with its average since 2007.
The Bank of England (BoE) increased the Bank Rate by +0.25% to 4.00%. That development was anticipated, although the vote-count surprised somewhat. In the event, 1 out of 9 members voted in favor of a +0.50% hike, versus consensus that 2 members would support a stable rate.
Given also a generally somewhat more hawkish than anticipated rhetoric, investors now price-in a c. 50% chance of the next rate hike coming in the December 17th meeting (a week ago, such an event was priced-in for February 2027).
The global Technology equity sector suffered heavy losses in the past week. The MSCI ACWI Information Technology (IT) index fell by -8.3% wow, with cumulative losses of -18.3% compared with recent record highs on October 6th, entering correction territory (>10% losses from recent peaks).
Having said that, the MSCI ACWI IT entered the current week with a partial recovery (+3.0% on November 9th), while still being close to +200% compared with 4 years ago, when ChatGPT was released, marking the start of the generative Artificial Intelligence (AI) revolution.
Notably, the past week’s sell-off did not feed through to a broader equity downturn. In the event, relatively less tech-heavy equity bourses held their ground, with the EuroStoxx up by +0.8% wow.
Concerns regarding the sustainability of strong returns on massive capital investment, particularly regarding AI and of hefty profit margins remained center-stage.
In addition, some considerations gained some fuel, regarding if and to what extent the impetus in the development of AI data centers in the US, could be affected by the results in the US “mid-term” elections. Recall that AI data center development has drawn some civilian backlash, although it should be noted that respective concerns have been bipartisan.
The results in the US “mid-term” elections were overwhelmingly positive for the candidates supported by the Democratic Party, both at the federal (legislature) and the State (legislature as well as Governors) level. Regarding the federal legislature (Congress), which is bicameral, the majority in both the House of Representatives and the Senate flipped in favor of the Democrats.
US President Trump commented that the war on Iran and the public discontent from the subsequent spike in energy costs inflicted a heavy toll on the election results of Republican-backed candidates.
As a result, international prices of major energy commodities fell sharply (Brent crude oil: -16% wow and further by -6% on Monday November 9th to $92.6/barrel, the lowest since the end of past August) on investors’ hopes that the probability of an escalation in the Iran conflict may have eased. It should also be noted though that even if a renewed escalation is avoided, signs of a prospective restoration of smooth flows through the Strait of Hormuz remain elusive.
On the economic data front, the US labor market report for October was stronger than expected, with nonfarm payrolls net gains of +165 thousand (“k”), vs consensus for +65k and with the readings in the previous 2 months being substantially revised up by +84k (3-month average of +137k vs a monthly average of +89k since 2000). The unemployment rate fell by -0.1 pp mom to 4.1%, while the annual growth of average hourly earnings stood at +3.1%, roughly in line with its average since 2007.
The Bank of England (BoE) increased the Bank Rate by +0.25% to 4.00%. That development was anticipated, although the vote-count surprised somewhat. In the event, 1 out of 9 members voted in favor of a +0.50% hike, versus consensus that 2 members would support a stable rate.
Given also a generally somewhat more hawkish than anticipated rhetoric, investors now price-in a c. 50% chance of the next rate hike coming in the December 17th meeting (a week ago, such an event was priced-in for February 2027).