High Oil Prices Shatter Global Central Banks’ Hopes For Monetary Easing

On Friday, the Dow Jones Index (US30) fell by 1.09% (-1.05% for the week). The S&P 500 Index (US500) declined by 1.82% (-0.78% for the week). The Nasdaq Technology Index (US100) closed Friday down 3.46% (-2.29% for the week). Friday’s sell-off on the US market officially confirmed a deep structural rotation out of the technology sector and into traditional cyclical industries. Intel’s -28.6% plunge following weak guidance and Amazon’s 1.4% decline amid increased AI capex projections ultimately cast doubt on the profitability of Big Tech’s massive capital investments. This immediately pressured the entire semiconductor supply chain, with Nvidia (-4.2%), AMD (-11.0%), Broadcom (-5.5%), and Micron (-5.3%) suffering significant losses. The continued decline in Alphabet (-1.4% following its previous 12.6% collapse) cemented Nasdaq’s monthly decline at 6.6%.

The coming week will be the decisive stretch of the fourth quarter for global markets, with investor focus shifting toward the US midterm elections on November 3 and a substantial batch of US macroeconomic data releases. A Democratic victory in the House of Representatives, widely anticipated by the market, combined with uncertainty surrounding the Senate, threatens to place Washington into a period of divided government. For the financial sector, this implies a freeze on new fiscal initiatives from the Donald Trump administration and rising political uncertainty ahead of the US Treasury’s announcement of its government debt refinancing plans. The corporate earnings season and regional developments will only reinforce intermarket divergence. Third-quarter earnings season will reach its peak with reports from technology and industrial giants including Apple, AMD, Qualcomm, Palantir, Pfizer, and Berkshire Hathaway. These releases will shape the outlook for risk assets and answer the key question regarding the actual return on record AI infrastructure investments.

Canada’s estimated GDP contraction of 0.1% in September and the slowdown in third-quarter growth to 0.3% (from 0.8% in Q2) highlight the increasing cooling of the Canadian economy under the pressure of restrictive financial conditions. Flat growth in August and stagnation in the services sector further confirm that domestic consumption has exhausted its recovery momentum. This macroeconomic backdrop places the Bank of Canada in an extremely difficult position amid the renewed tightening cycles of other G10 central banks. For the Canadian dollar (CAD), these data create an additional bearish vector. Losing ground on interest-rate differentials to both the US Federal Reserve (3.75%-4.00% with expectations for another increase in December) and the Reserve Bank of Australia, the loonie remains vulnerable to further selling pressure.

In Europe, Germany’s DAX (DE40) declined by 0.85% (+2.31% for the week), France’s CAC 40 (FR40) closed down 0.01% (+1.96% for the week), Spain’s IBEX 35 (ES35) fell by 1.09% (-0.92% for the week), while the UK’s FTSE 100 (UK100) ended the session 0.07% higher (+0.15% for the week). Europe will see four central bank meetings this week. In the United Kingdom, a 25-basis-point rate increase is expected. Together with decisions from the Riksbank, Norges Bank, and the National Bank of Poland, the region is entering a phase of forced monetary tightening in which soaring energy costs outweigh concerns about weak economic activity. Europe’s macroeconomic backdrop further amplifies this stagflationary impulse. Outlook: Eurozone inflation is expected to jump to 3.9% in October, the highest level since September 2023, while elevated national readings in Italy (5.6%) and Spain (4.9%) limit the ECB’s ability to support the struggling manufacturing sector. Corporate results from European giants including Rheinmetall, Ferrari, BMW, Deutsche Telekom, and Bayer will be released under the dual pressure of high interest rates and rising raw material costs.

The surge in WTI crude to $104.12 per barrel and Brent crude to $117.64 by the end of October officially secured a 15% monthly gain, marking the strongest systemic geopolitical impulse of the year. Escalating tensions around the Strait of Hormuz and tanker-related incidents have created a substantial geopolitical risk premium. Washington’s position regarding the possible resumption of military operations against Iran amid stalled negotiations with Tehran has effectively eliminated market hopes for a rapid de-escalation. Trading at their highest levels since mid-September, energy prices are directly undermining global central banks’ hopes for monetary easing, reinforcing the hawkish stance of the Federal Reserve, the Reserve Bank of Australia, and the Bank of England.

In Asia, Japan’s Nikkei 225 (JP225) dropped by 2.12% (+1.13% for the week), China’s FTSE China 50 rose by 1.54% (+1.61% for the week), Hong Kong’s Hang Seng (HK50) gained 1.46% (+1.13% for the week), while Australia’s ASX 200 (AU200) added 0.18% on Friday (+2.08% for the week).

The Asia-Pacific region is set to display the greatest monetary and macroeconomic divergence, with the Reserve Bank of Australia (RBA) meeting serving as the key event. The expected 25-basis-point increase in the RBA cash rate from 4.60% to 4.85% highlights persistent inflationary pressure in the country, fueled by global oil prices above $100 per barrel and a renewed acceleration in CPI to 4.3%. While Australia reinforces its status as the region’s monetary hawk, minutes from the Bank of Japan’s September meeting and wage growth data will provide insight into Kazuo Ueda’s willingness to continue policy normalization in December, potentially raising rates to 1.5%, even as manufacturing PMI readings continue to soften across China and the broader Asian region. GDP data from Hong Kong and Indonesia, along with New Zealand’s labor market report, will show how deeply the energy shock has penetrated the Asia-Pacific real economy, while Bank Negara Malaysia attempts to preserve a fragile balance of monetary support.

• S&P 500 (US500) 7,580.07 -140.32 (-1.82%)

• Dow Jones (US30) 51,770.31 -572.25 (-1.09%)

• DAX (DE40) 25,818.21 -221.47 (-0.85%)

• FTSE 100 (UK100) 10,729.78 +7.71 (+0.07%)

• USD Index 101.96 -0.07 (-0.07%)

News feed for: 2026.11.02

• Australia Manufacturing PMI (m/m) at 00:00 (GMT+2) – AUD (MED)

• Japan Manufacturing PMI (m/m) at 02:30 (GMT+2) – JPY (MED)

• China RatingDog Manufacturing PMI (m/m) at 03:45 (GMT+2) – CHA50, HK50 (MED)

• German Retail Sales (m/m) at 09:00 (GMT+2) – EUR (LOW)

• Switzerland Retail Sales (m/m) at 10:30 (GMT+2) – CHF (LOW)

• Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+2) – EUR (MED)

• UK Manufacturing PMI (m/m) at 11:30 (GMT+2) – UK (MED)

• Canada Manufacturing PMI (m/m) at 16:30 (GMT+2) – CAD (MED)

• US ISM Manufacturing PMI (m/m) at 17:00 (GMT+2) – USD (MED)