Market Watch — Oct. 30, 2026

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Week in review

trick or treating

Blackfalds RCMP urge parents to check Halloween candy after needle found

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19-years-old

Red Deer man found dead in fatal rollover near Cochrane

17h ago

Tech reversal and hawkish central banks test markets

U.S. equities advanced early in the week as Anthropic’s record-setting IPO filing and strong semiconductor results revived AI optimism, while resilient durable-goods data and the Fed’s expected hold supported risk appetite; momentum reversed sharply later in the week as disappointing Alphabet, Amazon and Intel results renewed concerns around AI spending and monetization, with stronger GDP, firmer inflation and renewed Iran tensions compounding a technology-led correction on Friday. Canadian equities initially benefited from constructive global sentiment, but the Bank of Canada’s (BoC) hawkish rate increase, soft monthly GDP and late-week oil volatility produced a more uneven backdrop. Across the pond, European stocks proved comparatively resilient as the European Central Bank (ECB) held rates, eurozone growth exceeded expectations, and the U.K. bank surcharge was less severe than feared, although sovereign-debt and energy concerns persisted. Asian and emerging market equities were volatile as early semiconductor strength gave way to renewed AI-demand concerns, while China remained pressured and Brazil reacted negatively to Lula’s election victory.

• U.S. equities returned -0.57%¹, as enthusiasm around the AI trade faded sharply late in the week, with megacap earnings raising fresh questions over investment returns just as firm economic data and geopolitical tensions added to risk aversion.
• Canadian equities returned -0.42%², as tighter monetary policy and signs of softer growth weighed against support from the resource sector, leaving domestic stocks caught between higher-rate concerns and volatile commodity markets.
• European equities returned 0.82%³, as encouraging eurozone growth helped the region weather the global technology selloff, though elevated energy prices and persistent fiscal concerns in France and Italy remained headwinds.
• Emerging market equities returned 1.27%⁴, with regional performance diverging as technology sentiment deteriorated; Chinese shares remained under pressure and Brazilian assets reacted negatively to Lula’s election victory.

Strong data keeps rate risks alive

U.S. Treasurys traded cautiously ahead of the Federal Reserve (Fed) rate decision, before yields briefly declined as its hold and balanced messaging were initially interpreted as slightly dovish; stronger GDP and firmer core Personal Consumption Expenditure (PCE) inflation later reinforced expectations that further tightening remains possible. Canadian bonds came under pressure after the BoC raised rates and upgraded its growth and inflation forecasts, pushing yields higher, although softer Friday GDP data complicated the outlook. European sovereign markets remained volatile amid persistent French and Italian fiscal concerns, while the ECB’s somewhat cautious hold briefly pulled German yields lower before Lagarde reinforced expectations for further tightening. Japanese yields eased Friday despite the Bank of Japan (BoJ) maintaining a hawkish bias after holding rates, as broader risk aversion supported sovereign bonds.

• The 2- and 10-year U.S. Treasury yields were 5 bps and 2 bps lower, respectively. In Canada, the 2- and 10-year sovereign yields were 7 bps and 1 bps lower, respectively. Bond yields and prices move inversely to one another.
• Government bonds navigated competing forces from still-hawkish central banks and late-week risk aversion, while French and Italian fiscal concerns kept European sovereign markets particularly volatile.
• Resilient U.S. growth and firmer inflation kept additional Fed tightening on the table, while the BoC’s hike reinforced its inflation-fighting bias before softer Canadian GDP introduced greater uncertainty around the policy outlook.

BoC hikes as growth data softens

The BoC raised its overnight rate by 25 bps to 2.50%, accompanying the move with higher growth and inflation forecasts and signalling that further tightening may be required, albeit with policymakers proceeding carefully. The Bank raised its 2026 growth forecast to 1.0% from 0.7% and now expects 2.0% growth in both 2027 and 2028. Friday’s GDP report provided a counterpoint: the economy was unchanged in August, missing expectations for 0.2% growth, while preliminary data pointed to a 0.1% contraction in September. Third-quarter growth is now tracking at a 1.3% annualized pace based on industry data, below the BoC’s 2.0% forecast, introducing some uncertainty around the need for another near-term rate increase.

Highlights:

• The BoC raised rates 25 bps to 2.50% and said the policy rate could need to increase further, while emphasizing that Governing Council would “proceed carefully.”
• Inflation is now forecast to average 3.1% in 2027, up sharply from the previous 2.0% projection, while the Bank also upgraded its growth forecasts through 2028.
• August GDP was flat versus expectations for 0.2% growth, with goods output rising 0.1% and services declining 0.1%; Statistics Canada’s preliminary estimate points to a further 0.1% decline in September.

Fed holds rates steady as U.S. growth accelerates, inflation remains elevated

The U.S. Federal Reserve (Fed) held interest rates steady this week, as policymakers balanced resilient economic growth against inflation that remains above the central bank’s target. The Federal Open Market Committee maintained the federal funds rate at a range of 3.75% to 4.00%, saying economic activity continues to expand at a strong pace while inflation remains elevated. Fresh economic data released later in the week highlighted the challenge facing policymakers. The U.S. economy expanded at an annualized rate of 3.4% in the third quarter, accelerating from 2.2% in the previous quarter. Meanwhile, the Fed’s preferred inflation measure showed price pressures remain persistent as the Personal Consumption Expenditures Price Index (PCE) rose 0.5% in September and 3.6% from a year earlier.

Highlights:

• Excluding volatile food and energy prices, core PCE increased 0.3% during the month and 3.1% year-over-year.
• Consumer spending increased 0.5% in September, while personal income rose a more modest 0.2%. After adjusting for inflation, spending was essentially unchanged.
• GDP growth was supported by increases in investment, consumer spending and government spending, partly offset by weaker exports. Private domestic demand remained particularly firm, with real final sales to private domestic purchasers advancing 4.9%.

Eurozone economy grows as ECB holds rates steady amid inflation risks

The eurozone economy continued to expand in the third quarter, providing a measure of resilience as the European Central Bank (ECB) kept interest rates unchanged amid persistent uncertainty surrounding inflation and energy prices. Gross domestic product (GDP) increased 0.4% in the third quarter compared with the previous three months, according to data released Eurostat. Growth moderated from 0.6% in the second quarter. Compared with the same period a year earlier, GDP expanded 1.3%, slightly stronger than the 1.2% annual pace recorded in the previous quarter.

Highlights:

• Performance varied across the region’s major economies. Spain posted quarterly growth of 0.6%, while Germany expanded 0.2%. Italy’s economy was unchanged, while France contracted 0.1%. Ireland recorded the strongest quarterly increase among countries reporting data, growing 5.5%.
• The GDP figures came one day after the ECB left its three key interest rates unchanged. The deposit facility rate remained at 2.50%, while the main refinancing and marginal lending facility rates were maintained at 2.65% and 2.90%, respectively.
• The ECB said rising energy prices continue to pose upside risks to inflation and downside risks to economic growth. Although underlying inflation has remained broadly stable and wages have yet to show a material response, policymakers cautioned that the magnitude and duration of the energy shock could push prices higher while weighing on activity.