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Global stock markets ended the week lower as rising Middle East tensions pushed oil prices up and doubts grew over how the surge in artificial intelligence investment will be financed, with investors now focused on interest rate decisions from the US, European and Japanese central banks.

Brent crude for December delivery approached $117 a barrel, gold dropped below $4,000 an ounce and more than $1 trillion was wiped off the market value of global equities. Turkey's central bank cut its policy rate for the first time in five meetings.

Oil climbs while bonds and gold retreat

No market-moving US data was scheduled this week, and fears that geopolitical tensions in the Middle East could flare up again in the near term kept inflation concerns alive. The risk of a fresh conflict in the region, together with already elevated transport costs, drove oil prices higher, with December Brent nearing $117 per barrel.

The prospect of costlier energy reinforcing inflationary pressure kept forecasts for central bank policy steps tilted toward tighter settings. President Donald Trump's possible increase of military pressure on Iran after the November 3 elections also led markets to price in a potential conflict again.

As weakness spread from technology and AI-related shares to the wider market, investors moved into safe-haven assets. The US 10-year Treasury yield fell below 5% on Thursday for the first time in about a month and closed the week at 5%, down 8 basis points. The dollar index ended the week little changed at 101.8.

Gold remained under pressure from the Middle East tensions and expectations that interest rates could stay high. The metal fell below $4,000 an ounce on Friday for the first time in roughly three months and ended the week at $3,995, a weekly decline of 4.1%. December Brent rose 6.5% over the week to $116.9 a barrel.

AI financing doubts fuel tech selling

Concerns grew worldwide that high borrowing costs could weigh on AI investment, which is seen as a driver of economic growth. Chipmakers and other technology stocks came under selling pressure through the week, and the combined market value of global exchanges lost more than $1 trillion.

Analysts said the worry over financing AI investment stems from the uncertainty about how long it will take and to what extent the very large spending will turn into profit. They said this has caused swings in shares of semiconductor, data center and cloud computing companies.

Analysts also said rising borrowing costs worldwide make building data centers or expanding capacity more expensive. Companies that fund their investments with debt face higher interest expenses, which reduces the economic appeal of new projects.

Wall Street mixed as earnings season accelerates

US equities had a mixed week. The S&P 500 fell 0.47% and the Nasdaq dropped 0.71%, while the Dow Jones rose 0.41%.

Meta reported results for the July-September period of 2026. Revenue in the third quarter rose 26% from the same period a year earlier to $64.6 billion, up from $51.2 billion. Net profit climbed 264% to $9.9 billion, compared with $2.7 billion a year earlier. Tesla's net profit fell 43% year on year to $787 million in the third quarter, from $1.4 billion, while revenue was unchanged at $28 billion.

Next week the calendar includes the Chicago Fed national activity index and the Dallas Fed manufacturing index on Monday; durable goods orders, new home sales, the Dallas Fed services index, the Conference Board consumer confidence index and the Richmond Fed manufacturing index on Tuesday; the Federal Reserve's rate decision and a speech by Fed Chair Kevin Warsh on Wednesday; and the personal consumption expenditures (PCE) price index and growth figures on Thursday. Markets expect the Fed to leave its policy rate unchanged. Reports from Amazon, Microsoft and Alphabet are also due.

European and Asian benchmarks fall

European bourses sold off on geopolitical concerns and the risk that unrest in France could spread across the region. Selling in French government bonds deepened as escalating street violence raised fears for public finances. The country's 10-year yield rose to 5.07%, its highest level since 2002, and for the first time since 2013 exceeded the US 10-year yield. Over the week the FTSE 100 lost 1.76%, the DAX 1.84%, the CAC 40 2.19% and Italy's MIB 30 2.60%.

Germany's September producer price index rose 1.9% from the previous month and 6.7% from a year earlier, above expectations and faster than in August, marking the biggest annual increase since March 2023. SAP, one of Europe's largest technology companies, beat third-quarter expectations with quarterly revenue above 10 billion euros and forecast 2026 revenue of between 36.3 billion and 36.8 billion euros.

In Asia, equities fell under the lead of the semiconductor sector. Higher oil prices are adding to energy cost and inflation concerns, which remains a negative factor for economies in the region that depend on energy imports, while elevated inflation and the prospect of rates staying high weigh on valuations of growth-focused technology stocks. The Kospi dropped 2.08%, the Hang Seng 4.52%, the Nikkei 225 4.03% and the Shanghai Composite 0.69% over the week.

Japan's inflation stood at 2.1% in September on an annual basis, in line with expectations, while core inflation rose above 2% for the first time in nine months. Exports grew 16.7%, below expectations and slower than in August, supported by strong demand for semiconductors and AI products. The Bank of Japan is expected to leave its policy rate unchanged at its decision next week, with Tokyo CPI data also due on Friday.

Turkey's central bank cuts rates after five meetings

On the domestic front, Borsa Istanbul's BIST 100 index closed at 11,116.99 points, down 5.16% over the week. The Monetary Policy Committee of the Central Bank of the Republic of Turkey cut the one-week repo rate, its policy rate, by 100 basis points to 36%. It also lowered the overnight lending rate from 40% to 39% and the overnight borrowing rate from 35.5% to 34.5%. Having last cut rates at its January meeting, the bank reduced its policy rate for the first time in five meetings.

A law proposal containing regulations on certain investment funds earmarked for liquidation was adopted in the General Assembly of the Grand National Assembly of Turkey. Under the text, confiscation decisions may be made in investigations into acts linked to the funds covered by the regulation, in line with the relevant provisions of the Code of Criminal Procedure. The Capital Markets Board will notify the Savings Deposit Insurance Fund of the loss or damage amount for each fund, the real and legal persons responsible and the amounts they are accountable for.

Amounts accumulated in the recovery account will be transferred by the Savings Deposit Insurance Fund to the Investor Compensation Center after mandatory expenses, for payment to the liquidation body or, where liquidation is complete, to the fund shareholders identified by the Capital Markets Board. Payments will be made in proportion to unit ownership. The lira ended the week at 49.6940 against the dollar, 0.4% above the previous weekly close.

Next week the unemployment rate is due on Tuesday and the foreign trade balance on Wednesday. Domestic markets will trade a half day on Wednesday, October 28, and will be closed on Thursday, October 29, for Republic Day.

Key takeaways

• Global equities lost more than $1 trillion in market value as technology and AI-related shares sold off on financing concerns.
• December Brent crude rose 6.5% over the week to $116.9 a barrel on Middle East tensions, while gold fell 4.1% to $3,995 an ounce.
• Markets expect the Fed, ECB and Bank of Japan to hold rates next week, with the Fed decision and US growth and PCE data in focus.
• Turkey's central bank cut its policy rate by 100 basis points to 36%, its first reduction in five meetings, and BIST 100 fell 5.16%.