Market insights,
October 2026
Investing
5 min read
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The most noticeable events for investors in October were largely stacked towards the end at the month. Key monetary policy announcements, as well as volatility across tech stocks and a ginormous crypto hack [1], all added to the drama.
As 2026 draws to a close, investors can expect more pockets of short-term market turbulence across global markets. However, the underlying economic picture remains resilient, particularly in the US.
NZ interest rates held, for now
Starting at home, and the Reserve Bank of New Zealand (RBNZ) surprised many market commentators with the decision to hold the OCR at 2.75% [2].
Despite inflation sitting above the target range, mainly due to elevated oil prices stemming from the US-Iran war choking supply, the RBNZ’s Monetary Policy Committee voted 4-3 to hold fire on the rate rise that many had thought was imminent [3].
New Zealand’s economic recovery remains fragile and uneven, and there is still plenty of macroeconomic and geopolitical uncertainty around the world for policy makers to contend with.
As stated on the RBNZ website following the announcement: “Members reflected on potential trade-offs associated with increasing the OCR at this meeting or waiting until the December MPS. Members discussed that information arriving over the next six weeks could meaningfully change the appropriate policy stance in either direction. There is a risk that inflation becomes entrenched before conventional expectations measures respond, despite the previous two OCR increases. In addition, the world economy could tip abruptly into a downturn causing weaker inflation over the medium term. It is also possible that geopolitical escalation could drive fuel prices higher while weakening global economic activity at the same time.[4]”
For New Zealanders, future rate rises are still expected. In October, at least, Kiwi borrowers were granted some breathing space.
Interest rates also held in the US
Meanwhile in the US, members of the Federal Open Market Committee (FOMC) voted 10-2 in favour of keeping the target range for the federal funds rate at 3-3/4 to 4 percent [5].
Despite inflation running hot and US economic growth looking strong, the FOMC decided against back-to-back rate rises. As a reminder, the Fed’s rate rise in September was its first one in 3 years.
While President Trump has been vocal about wanting rate cuts, a rate hold in October wasn’t entirely bad news for him in the run-up to US mid-term elections.
If the latest political polls are to be believed, a large voter backlash is brewing against the Republicans [6], with higher gas prices – directly linked to the Iran war – hurting the pockets (as well as the mood) of US consumers. Had borrowing costs increased for a second consecutive month, it may have added fuel to the electorate fire. Mortgage interest rates in the US are also prohibitively high, seriously chilling home sales.
With regards to the war with Iran, there were ominous signs of re-escalation across October. Reports of the US deploying more resources to the Gulf, even as costs were reported to have already hit USD $47 billion [7], does not bode well for the outlook of oil prices, and in turn, inflation, and in turn interest rates.
A big month for tech
In equity markets, the eye-catching moves came via the so-called AI trade, with a flurry of underwhelming earning reports unsettling investors.
The mood started to sour when Intel reported weaker than expected sales forecasts, as did Amazon – one of the Mag-7 firms [8]. Their announcements spooked investors who had already been questioning the sustainability and feasibility of the recent boom in AI investments.
In parallel, Anthropic – one of the biggest players in the AI space – unveiled its prospectus ahead of the much-hyped IPO. Included in the list of risks, was the frank admission that: “Sufficiently advanced AI systems could, if not developed, deployed, and operated with appropriate safeguards, oversight, and security measures, pose catastrophic or existential risks to humanity.[9]”. It was a striking reminder that even as investors attach enormous value to the potential of AI, the technology itself continues to develop at a pace that brings considerable uncertainty and risk.
Meanwhile, at the end of the month, Binance – the world’s biggest crypto exchange – disclosed that it had been hacked to the tune of USD $6.3 billion. The blame was quickly attributed to hackers linked to North Korea[10].
All in all, October provided a hefty reality check for investors. From questions over the returns being generated by enormous investment in AI, to the risks being acknowledged by the technology’s own developers, and finally the security vulnerabilities exposed by the Binance hack, the month put some of the assumptions underpinning the technology boom firmly to the test.
While last month’s events don’t necessarily diminish the long-term potential of these technologies, they were a reminder that innovation can be an unsettling journey.
In summary
In many ways, October echoed trends that we’ve seen throughout 2026. Contagion from the Iran war continued to be felt far and wide, while uncertainty around AI remained a catalyst for equity market volatility.
On the plus side, periods of volatility can create opportunities for active investment managers to distinguish themselves, and in such conditions, opportunities can often be found. At the same time, the ongoing resilience of the US economy continues to provide a supportive backdrop for global investors.
October also saw a return to relative placidity in bond markets, following a hectic September in which government bond yields had soared.
With the US midterm elections looming and tension rising in the Middle East, we should expect further bouts of market volatility and interest rate speculation as the curtain comes down on 2026.
By the time we publish our December Market Insights article, we may also have a clearer idea of which party, or parties, will form New Zealand’s next government. Against the backdrop of a fragile economic recovery, domestic investors will be hoping for clarity and stability, sooner rather than later.
References
[1] https://www.bbc.com/news/articles/cwj34gdmnly4o
[2] https://www.rbnz.govt.nz/news-and-events/news/2026/10/ocr-held-at-2-75-percent
[3] https://www.rbnz.govt.nz/news-and-events/news/2026/10/ocr-held-at-2-75-percent
[4] https://www.rbnz.govt.nz/news-and-events/news/2026/10/ocr-held-at-2-75-percent
[5] https://www.federalreserve.gov/newsevents/pressreleases/monetary20261028a.htm
[6] https://www.bbc.com/news/articles/cwly5lmvy38qo
[7] https://www.cbsnews.com/news/iran-war-cost-centcom-47-billion/
[8] https://www.morningstar.com.au/markets/tech-stocks-sell-off-intel-amazon-earnings-spook-investors
[9] https://www.bbc.com/news/articles/cq398p1wd1evo
[10] https://www.rnz.co.nz/news/world/2252378/hackers-steal-11-point-2-billion-from-binance-in-record-heist-blamed-on-north-korea
Photo credit: Jen Dries Malnu for Unsplash