October in review
October brought renewed market volatility across global markets as investors responded to shifting interest rate expectations, higher energy prices, and questions about technology valuations. Technology stocks came under pressure as investors reassessed the pace at which significant investment in artificial intelligence (AI) could translate into profits. There were notable swings in the bond market, as well, as expectations for the path of interest rates evolved. Commodity markets were also unsettled as shifting global supply and demand expectations influenced energy and precious metals. Together, these crosscurrents created a month marked by changing market leadership and mixed performance across asset classes.
Here are some of October's most notable events:
Technology stocks cooled as questions around AI spending grew. Technology stocks were volatile in October as investors took a closer look at company valuations and spending on AI. Earlier in the month, higher bond yields put pressure on technology valuations by reducing the present value of expected future earnings. Later in October, technology stocks came under renewed pressure as investors questioned how quickly large AI investments would produce returns. By month’s end, the S&P 500 Information Technology sector declined 6.8%, but remained up 19.7% year-to-date. Tech’s volatility in the month reinforced how quickly market leadership can change and the value of diversification rather than relying too heavily on one sector or investment theme.
Bond yields fell as investors sought safer assets. Bond yields moved higher at the start of October, with the benchmark U.S. 10-year Treasury yield briefly reaching 5.3%, its highest level since 2002. Yields then fell sharply as weakness in technology stocks and concerns about AI spending led investors toward safer assets. The 10-year yield ended October around 4.9%, roughly 38 basis points below September month-end. Higher starting yields put pressure on existing bond prices, then w hile technology stocks came under pressure, government bonds rallied, showing how different investments can respond differently to the same market conditions and reinforced the traditional role of bonds as a portfolio diversifier.
Central banks took different paths as inflation remained in focus. On October 28, the Bank of Canada increased its benchmark interest rate by 0.25% to 2.50%, marking its first rate hike since 2023. The decision reflected concerns that persistently elevated energy prices and rising business costs could lead to broader inflationary pressures. The BoC also revised its inflation outlook higher, projecting inflation to reach approximately 3.5% by year-end. In contrast, the U.S. Federal Reserve left its target rate unchanged at 3.75% to 4.00% at its October meeting as it continued to assess inflation and economic conditions.
| Index† | Change (%) | Index Level | ||
|---|---|---|---|---|
| 1 Mth | YTD | 1 Yr | ||
| Treasury Bill | 0.19 | 1.85 | 2.23 | 194.42 |
| Canadian Bonds | 1.48 | 0.69 | -0.32 | 1,208.06 |
| Canadian Equities | 1.24 | 14.41 | 20.41 | 35,620.03 |
| U.S. Bonds | 2.44 | -0.54 | -0.07 | 2,336.13 |
| U.S. Equities | -0.87 | 11.75 | 12.09 | 7,580.07 |
| Global Equities | -0.75 | 11.28 | 12.56 | 4,862.38 |
| Emerging Markets | -8.04 | 13.76 | 14.42 | 1,566.63 |
| Currencies† | Change (%) | Exchange Rate | ||
|---|---|---|---|---|
| 1 Mth | YTD | 1 Yr | ||
| C$/US ($) | 1.84 | -1.78 | 0.25 | 0.7156 |
| C$/Euro (€) | 3.43 | 3.38 | 3.67 | 0.6414 |
| C$/Pound (£) | 0.89 | -1.18 | -1.55 | 0.5344 |
| C$/Yen (¥) | 1.91 | -1.34 | 2.55 | 112.723 |
| Commodities (US$)† | Change (%) | Price | ||
|---|---|---|---|---|
| 1 Mth | YTD | 1 Yr | ||
| Gold Spot ($/oz) | -12.81 | -8.01 | 12.59 | 314.88 |
| Oil WTI ($/barrel) | 17.76 | 82.92 | 73.39 | 104.12 |
| Natural Gas ($/MMBtu) | -14.01 | -35.01 | -38.52 | 2.90 |
Source: Bloomberg. Treasury Bill is represented by the FTSE Canada 60 Day T-Bill Index (C$), Canadian Bonds represented by the FTSE Canada Universe Bond Index (C$), Canadian Equities represented by the S&P/TSX Composite TR Index (C$), U.S. Equities represented by the S&P 500 TR Index (US$), International Equities represented by the MSCI EAFE GR Index (US$), Emerging Market Equities represented by the MSCI EM GR Index (US$), European Equities represented by the MSCI Europe Index (€). Indices are not managed, and it is not possible to invest directly in an index. Assumes reinvestment of all income and no transaction costs or taxes.
† Total Return, as at October 31, 2026.
Did you know?
October’s market weakness wasn’t felt equally across the globe. Some of the largest U.S. technology companies struggled as investors questioned high valuations and AI, while more value-oriented areas of the market showed greater resilience. According to MSCI, in October, the MSCI USA Growth Index fell over 5%, while the MSCI USA Value Index gained over 3%, a difference of nearly nine percentage points. It was a reminder that market leadership can change quickly. For long-term investors, periods like October reinforce the value of diversification and avoiding too much exposure to one sector, investment style or recent market winner.
Insights from our Portfolio Managers
Recent market volatility has been driven by higher bond yields, inflation concerns and geopolitical uncertainty. While that has created some short-term pressure, economic growth and corporate earnings remain supportive. Higher yields have also improved the outlook for fixed income, reinforcing the value of staying diversified and focused on long-term goal.
Periods of volatility can feel uncomfortable, but they can also create better opportunities looking forward. We continue to see healthy economic growth and solid corporate earnings, while higher yields mean bonds now offer more attractive income than they have in some time. We’re staying diversified, monitoring risks closely and making adjustments where appropriate, rather than reacting to short-term market moves. That discipline remains an important part of how we manage portfolios through changing conditions.
— Craig Maddock, VP & Senior Portfolio Manager, Head of Multi-Asset Management
