Key Takeaways
- European shares were little changed as investors weighed technology losses and the upcoming US midterm elections.
- Questions over the cost of AI expansion continued to put pressure on technology stocks.
- Apple’s earnings were among the key reports investors were waiting for.
- Oil prices fell as diplomatic efforts involving Iran continued.
Global markets opened November without a clear direction on Monday. European shares were mostly flat, Asian markets were mixed and US stock futures moved higher after Wall Street ended October with losses. Investors were looking at several developments this week, including Apple’s earnings, the US midterm elections and new economic data. The recent decline in technology stocks remained a concern, particularly as questions grew over how quickly companies will make money from their spending on artificial intelligence. Oil prices also fell as markets followed diplomatic discussions involving Iran. With several major events due over the coming days, investors appeared reluctant to make large moves before getting a clearer picture of the economic and corporate outlook.
Technology Stocks Extend Their October Slide As AI Spending Comes Under Scrutiny
Technology shares had a difficult end to October, and Friday’s losses carried into the start of the new month. The Nasdaq Composite fell 2.86% on Friday, while the S&P 500 dropped 1.82%. Over the full month, the Nasdaq lost almost 7%, its worst monthly performance since April 2025. The latest decline came as investors questioned whether the money being spent on AI infrastructure will deliver the returns companies expect. Alphabet, Amazon and other large technology firms have announced substantial plans to expand data centre capacity. That spending has helped chipmakers and other suppliers, but it has also left investors looking more closely at costs and the time it may take for these projects to become profitable.
Intel was among the biggest losers on Friday, with its shares falling nearly 29%. The wider S&P 500 technology sector ended October down 6.8%, its largest monthly decline since March 2025. Other sectors performed better during the month, which helped prevent a similar decline across the entire market. Goldman Sachs analysts expect major cloud companies to spend around $800 billion in 2026, rising to $1.2 trillion in 2027. Investors will want to see whether demand for AI services can keep pace with that level of investment. If revenue growth falls short, companies could face pressure to justify their spending and financing decisions.
Apple’s earnings are due to provide another look at the technology sector this week. Analysts were expecting earnings of around $2 per share on revenue of approximately $113 billion. Apple’s shares have held up better than those of several other large technology companies, partly because its business is less exposed to the data centre spending that has become a concern for investors. Updates on iPhone 18 demand are also expected to feature in the results.
The US midterm elections on November 3 are adding another issue for investors to follow. The outcome could affect future discussions around technology regulation, data centre development and government spending. However, any changes to policy would take time to work through Congress, so the immediate market reaction may depend more on the election result than on specific legislation.
Oil Retreats After October Gains While Treasury Yields Stay High
Oil prices fell on Monday after rising sharply during October. Brent crude was down 2% at $111.15 per barrel, while US West Texas Intermediate fell 2.3% to $101.73. Brent had gained 13.6% over the previous month. US government bonds also remained under pressure. The 10-year Treasury yield edged up to 4.941%, while the two-year yield reached 4.612%. Markets were pricing in a 72% chance of a quarter-point Federal Reserve rate increase in December. That expectation has eased over the past month, although borrowing costs remain an important consideration for investors.
The debate over AI spending is also connected to the bond market. Building data centres requires large amounts of capital, and some companies are expected to rely on borrowing to fund their plans. The IMF has warned that weaker-than-expected returns on AI investment could create problems if companies take on more debt than their future earnings can support. In currency trading, the euro rose 0.37% to $1.1199. The US dollar was little changed against the Japanese yen at 157.72. Gold also recovered 0.9% to $3,911 an ounce after losing 6.8% in October. Some investors had sold gold during the previous month to raise cash and cover losses or margin requirements in other investments.
Also read: Gold Prices Fall 1% as Markets Evaluate Fed Signals, Prior US Inflation Data
