Nick Spencer-Skeen, Senior Executive Officer, Lunaro Markets Limited
Friday Closing Prices
- S&P 500 7,659 (-1.09%)
- Nasdaq 29,187 (-2.50%)
- Gold $4,165 (-0.13%)
- Brent Crude Oil $109.60 (+3.75%)
Oil stole the headlines last week, with renewed energy pressures combining with increasingly hawkish central bank rhetoric to weigh on risk assets. Both Brent and WTI finished the week above $100 per bbl, as the ongoing Middle East conflict reinforced concerns over persistent inflation1.
Federal Reserve officials maintained a hawkish tone, with Williams reiterating his expectation for another rate hike this year2. The Fed’s Beige Book highlighted intensifying price pressures across several districts, while markets increasingly priced a December hike despite expectations for a hold in October3. Across the Atlantic, European Central Bank (ECB) officials also signalled that further tightening may be necessary, with some market participants assessing the possibility of further policy action later in the year4.
US fiscal concerns added to pressure in bond markets. The 2026 full-year budget deficit widened to $1.99 trillion, while net interest costs reached a record $1.05 trillion5. The 10-year yield hit fresh highs at 5.33% during the week, but ultimately closed the week lower than where it opened1.
Meanwhile, Q3 earnings season began with mixed results from major US banks. Despite expectations for another quarter of strong corporate earnings growth, rising yields and inflation concerns weighed heavily on tech valuations, pushing the Nasdaq 100 down over 5% and underscoring the increasingly difficult backdrop for stocks1.
Oil Takes Another Leg Higher
Oil prices surged last week, with the oil prices rose amid escalating geopolitical developments in the Middle East and concerns regarding potential supply disruption, including renewed attacks on shipping through the Strait of Hormuz and threats to Saudi energy infrastructure6. Reports of a missile interception near the strategically important Yanbu oil hub heightened fears that regional production and export capacity could face further disruption6.
Supply concerns extended beyond the Middle East, with Ukrainian strikes on Russian refining facilities adding pressure to already constrained fuel markets7. Meanwhile, a larger-than-expected drawdown in US crude inventories, partly driven by hurricane-related production outages, provided additional support8.
Despite efforts to release emergency reserves, geopolitical developments continue to be monitored by market participants as one of several factors that may influence energy prices and the broader inflation outlook.
The Fed Goes Quiet
The Fed enters its pre-meeting communications blackout this week, leaving investors without further policy guidance ahead of the October 27–28 meeting. The blackout, which began on the weekend, follows a series of closely watched remarks from policymakers, including Chair Kevin Warsh, John Williams, and Beth Hammack.
Recent commentary has highlighted growing divisions over the appropriate pace of tightening. While Williams continues to favour another hike this year2, Hammack has warned that persistent inflationary pressures could require a more aggressive response9. Warsh, however, signalled little urgency to act immediately, reinforcing expectations for an October hold10.
With policymakers now silent, attention shifts towards incoming economic data and market pricing. The key question is whether September’s rate increase bought the Fed sufficient time to assess inflation or merely delayed further tightening. Market expectations continue to reflect the possibility of further policy action later in the year, with Treasury yields and the US dollar likely to remain sensitive to incoming economic data and central bank communications.
Profits Under the Microscope
The Q3 earnings season gathers momentum this week, with several major companies reporting against a tough backdrop of factors that we ran through earlier in the Week Ahead.
Tech takes centre stage on Wednesday, with selected reporting companies including MAG7 names Meta and Tesla, along with IBM11. Meta’s results will be particularly important as investors assess whether accelerating AI infrastructure expenditure is translating into meaningful revenue growth and returns on invested capital.
Elsewhere, Netflix reports Tuesday, alongside GE Aerospace and General Motors, offering insights into consumer spending and industrial demand. Procter & Gamble follows Thursday, providing a useful gauge of pricing power and household consumption11.
With the Nasdaq 100 falling over 5% last week1, expectations are increasingly demanding. Strong earnings growth may provide some support, although market participants are expected to continue monitoring forward guidance and capital expenditure commitments alongside reported earnings results.
