Your October 2026 market update: tech sell-offs weigh heavily on markets around the world

This is part of our monthly series. Catch up on last month’s summary here: Your September 2026 market update: stock markets stutter as bond yields rise and AI could slow down

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October marked the start of Q4 and the final sprint towards the end of the year. But instead of tearing off at the sound of the starting gun, investors were cautious.

Our September update revolved around two key themes: a government bond sell-off and fears of a tech slowdown.

Government bonds continued to play their part in October. This worsened for some governments, while investors flooded to them in parts of the world, especially the US.

The latter movement was largely a reaction to the tech slowdown, as investors pressed the brakes on tech investments. 

Alongside those developments, some of the mainstays of 2026 continued to drive market activity.

With all this in mind, markets were turbulent last month. Find out what happened.

The headlines: a tech sell-off weighs heavily on the US and Asia

Last month’s rising bond yields slowed market growth. So, gains in the UK and Europe were most welcome.

The UK’s FTSE 350 holds many ‘defensive’ stocks, known for continuing to perform well in mixed markets. 

Gas and electricity, consumer staples, and pharmaceuticals may be less glamorous sectors. But they can withstand storms like the energy restrictions in the Middle East.

European equities finished up, a somewhat miraculous result given the context. Eurozone inflation grew to 3.8% from 3.2% in the latest figures, driven by spiking energy prices. 

That’s coupled with continued trouble for government bonds. In particular, France’s benchmark 10-year bond rose above 5%, the first time it’s broken the barrier since 2002. 

In the US, the S&P 500 fell this month amid the tech sell-off. 

That slightly understates its performance, having surged to its first all-time high since August early in October. Chipmakers serving the Artificial Intelligence (AI) giants rallied, while US Treasury yields fell.

However, investors flooded out of tech stocks, pulling that momentum back. Plus, there were big dips for Amazon and Google after disappointing results (more on this below).

In Asia, China’s markets experienced particular turbulence, officially sliding into a bear market (a drop of 20% or more). 

It was a similar story across the continent, with Japan, South Korea, Hong Kong, and Taiwan all posting losses this month (more on this below). 

Chancellor John Healey’s Budget makes less of a dent than expected

Investors closely watched Chancellor John Healey’s maiden Budget on Wednesday 28 October.

However, a Budget that’s been described as “underwhelming” in some quarters did little to move investors.

Healey focused largely on the cost of living, with announcements related to energy costs. That came in the wake of UK inflation rising to 3.5%. Meanwhile, modest tax rises take Britain’s tax burden to a historic high.

Even so, investors seemed calm, with the FTSE 100 rising 0.56% post-Budget announcement.

That doesn't mean markets won't react to how Britain’s economy changes moving forwards. Some of Healey’s announcements could harm growth in the UK, such as further taxes on small businesses and an increase in the tax banks pay.

All the while, Healey never mentioned reducing the government's dependence on debt. With gilt yields surging this year, interest payments make up a great deal of what the government spends.

The changes Healey did make, and those he didn't, could lower growth and hurt markets in future.

Read more in our Autumn Budget 2026 summary. Or listen to Philippa Lamb and Maike Currie, VP Personal Finance at PensionBee, go over the main talking points on The Pension Confident Podcast.

AI sell-offs pulled markets back 

While an early rally pulled the S&P 500 to a new high, it wasn’t all good news for tech.

Tech stocks had their worst day since June on 22 October. That led the S&P 500 to have its worst day since July. Meanwhile, the Nasdaq Composite - a tech-heavy index - had its worst month in over a year.

While AI stocks have risen in value over the past few years, investors are still tetchy. They're concerned that these companies are overspending and that valuations may be too high. That led investors to reduce how much they have in these companies this month.

Plus, Alphabet (Google’s parent company) and Amazon - two of the world’s biggest tech stocks - delivered underwhelming Q3 results.

Alphabet’s 25% increase in total revenues in Q3 compared to last year was below analysts’ expectations. The company said that was down to falling ad revenues, with its AI mode for search leading people to see and click on fewer ads. 

That spooked investors, pulling shares down 12% to a six-month low.

Meanwhile, Amazon reported strong profitability, with quarterly revenues rising 12% and income climbing to $28.1 billion. 

However, its large spending on AI infrastructure used up a great deal of its available cash, which worried investors. That sent the stock down around 3%.

The movements of individual companies wouldn’t be that impactful in most cases. But because these businesses make up such a large portion of the US market, these were big moves that dragged on the index.

Oil prices also rose back up to their highest since May, spooking investors across the board. 

All this goes some way to explaining why Asian markets struggled, too. 

Many of Asia’s biggest markets depend on the big tech stocks, as they include companies that serve the AI giants. 

A whole range of countries saw their main markets fall considerably this month alone. Across the continent, we saw falls in value of:

Source: MarketWatch

Swings and roundabouts in bond markets

Bonds - that’s loans to companies and governments - continued to play a big part in October’s market performance. But it was a change of direction this time.

Last month, we saw the US 30-year bond climb to 5.5% for the first time since 2004. That broader bond sell-off spilled over into corporate bonds in early October, too.

But with AI stocks wobbling, investors looked for more stable returns. In a complete reversal, they rushed out of AI stocks and flooded instead to US Treasury bills.

While yields are high, investors can earn a return without the same risk as tech stocks. 

What’s next?

Take a look at some of the stories we might see in November’s update.

Keep an eye on PensionBee’s blog, The Buzz, to see our latest update.

Risk warning

As always with investments, your capital is at risk. Past performance is not an indicator of future performance. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.