October gave us plenty to talk about. Big US technology shares had a wobble, oil prices climbed and the Chancellor delivered his first Budget. If you’d like a quick, jargon-free run-through of what the Budget means for you, we’ve recorded a short video you can watch here.
Beneath the headlines, we saw portfolios hold up reasonably well. For a sterling investor, global shares (the MSCI World Index) fell around 2% in October, partly because the pound strengthened against the dollar, but they are still up a healthy 11.6% so far this year. Closer to home, UK shares (the FTSE 100) rose just over 1% and are up 11.1% this year.
A quick note on currency: when the pound rises, the overseas investments we hold are worth a little less once converted back into sterling. In October the pound rose around 1.5% against the US dollar and also gained against the euro, which took the edge off returns from abroad. Over the year as a whole, the pound is roughly where it started against the dollar.
Big tech has a wobble
Some of the biggest names in US technology, including Google’s owner Alphabet and chipmaker Intel, had a rough time after their latest results. The worry is that the enormous sums being spent on artificial intelligence may take longer to pay off than hoped. As a result, the tech-heavy Nasdaq fell 5.3%, its worst month since March 2025, or closer to 7% in sterling terms.
But here’s the interesting part: most of the US market had a good month. Nine of its eleven sectors rose, and the average US company gained 4.9%, or around 3.4% for a sterling investor.
Next up is Anthropic, the company behind the Claude AI assistant, which is planning to list on the Nasdaq in mid-November. Reports suggest it could be valued at up to $2 trillion, which would make it the largest listing ever. Many see it as a real test of how keen investors are on AI.
Shares around the world
Europe kept its head: in their own currencies, German shares rose 2.5% and French shares were flat, although the stronger pound meant sterling investors saw little of those gains. Asia felt the tech wobble most, as many of its biggest companies make computer chips. In local currency terms, South Korean shares fell more than 16%, Japanese shares more than 6%, and Chinese and Hong Kong shares around 5%.
Oil, prices and interest rates
Oil jumped about 14% in October to over $110 a barrel, on fears the conflict involving Iran could further disrupt supplies. You may well have noticed this at the petrol pump, and it’s showing up in prices more widely too: UK inflation rose to 3.5% in September, up from 3.1% in August.
The US and European central banks left interest rates where they were this month. Here in the UK, the Bank of England is widely expected to raise rates from 3.75% to 4% on the 5th November, its first rise since 2023. That’s welcome news for savers, though less so for anyone with a mortgage or loan.
A quick word on government bonds
There were a few early fireworks in the UK bond market, with long-term borrowing costs hitting their highest level since 1998 at the start of the month, but things calmed down after a Budget that held few surprises. The next spark could come on Bonfire Night itself, when the Bank of England announces its interest rate decision on the 5th November. Bond markets will be watching closely, and we’re hoping for no surprises; more of a sparkler than a rocket.
Across the Channel, France was the one to watch. With high debts and an uncertain political picture ahead of next spring’s presidential election, investors want a bit more in return for lending to it, and French borrowing costs rose above 5% for the first time since 2002. It’s a good reminder that not all government bonds carry the same level of risk.
What this means for you
So, what can we take from all this? First, spreading your money across lots of companies and countries works: when big tech stumbled, many other investments held up nicely. Second, Budget rumours are rarely a reliable guide. Now that we know the actual changes, such as higher tax on savings interest from April 2027, we can plan around them calmly together.
Looking ahead, we’ll be keeping an eye on the market reaction to the the Democrats’ blue wave result in the US midterm elections, the Bank of England’s decision on the 5th November, and Anthropic’s listing.
As always, this update is here to keep you in the loop on what’s happening in markets and how it affects your portfolio. Your plan is built with months like this in mind, but if you have any questions, whether about the markets or what the Budget means for you, please don’t hesitate to get in touch with your adviser.
Chartered Wealth Manager & Head of Investment Strategy
Important information
The value of investments can fall as well as rise and you may get back less than you invested. Past performance is not a guide to future performance. Tax treatment depends on individual circumstances and may change in future. Investments in overseas markets are exposed to currency movements, which can reduce or increase returns.
This communication is for information only and does not constitute personal advice. If you are unsure whether any action is right for you, please speak to your adviser. Companies are mentioned for illustration only and are not a recommendation to buy or sell.
