Market Update October 2026

October and the first days of November turned on one question: who pays for the AI build-out? With oil and bond yields high, capital had become expensive, and when large technology companies reported rising spending and weaker cash flow, investors sold the most crowded part of the market. The Nasdaq Composite lost 5.3% in October, and on 5 November, after the midterms added political resistance to new data centres, the Nasdaq 100 had its worst day since March 2020. The money moved into companies with steady cash flows and dividends, which favoured Switzerland: the SMI rose 7.1% to a record and ended the first week of November level. Our Income strategies are built for this kind of market. Income 100 CH gained 6.46% in October with clearly lower volatility than its benchmark and rose again while technology shares collapsed, and our global strategies were cushioned by their large Swiss allocation.

Geopolitical Developments

The midterm elections on 3 November gave the Democrats both chambers of Congress, with gains of seven Senate seats and roughly 19 House seats. A divided government makes large new spending or tax programmes unlikely, which eases pressure on US borrowing. The vote also turned AI infrastructure into a local political issue: Texas elected a governor who campaigned on a moratorium for data centres, and most of the 41 local ballot measures on data centres backed restrictions. Investors read this as a risk that planned capacity will be delayed, and that fed directly into the technology sell-off two days later.

The war with Iran kept a risk premium in the oil price. A limpet-mine attack on a tanker in the Strait of Hormuz on 29 October, the first since the war began in February, and Houthi strikes on Saudi facilities pushed Brent higher. Qatari mediation in Tehran and Doha then led markets to price a deal. The United States still carried out what President Trump called “minor” strikes on air defences on Qeshm Island on 3 and 6 November.

In Europe, France showed how quickly weak public finances react to higher rates. The 10-year French yield rose above 5% for the first time since 2002, riots over the cost of living followed, and Moody’s kept the Aa3 rating only with a negative outlook. Christine Lagarde’s early exit from the ECB in February 2027 adds uncertainty while inflation is rising.

Market Developments by Asset Class

Equities

The October sell-off was a rotation more than a crash. The S&P 500 slipped only 0.9%, but its equal-weighted version gained 4.9%, the widest gap for any month since April 2009. Earnings season raised doubts about when the money spent on AI will earn a return: Alphabet fell 12.6% on 29 October after weaker growth and heavy AI spending, and Intel lost 28.6% on the last day of the month. Investors sold semiconductors, which lost about 15%, and bought energy, consumer staples, utilities and health care, sectors whose profits do not depend on that answer.

In early November the selling became more discriminating. Weak guidance from Qualcomm and Arm, rising credit costs for CoreWeave and the anti-data-centre votes all hit on 5 November. The damage was greatest where the business model depends most on borrowed money to build capacity. Neocloud operators that rent out AI computing lost the most, with Nebius down 22% and IREN 25% between 30 October and 5 November. Chipmakers followed, AMD falling 17.3% on the day, while platforms with their own cash flow held up far better, Amazon losing 2.2%. Over the week the S&P 500 fell 2.7% and the Nasdaq 100 4.9%.

Switzerland was the mirror image. Health care, food and insurance make up a large part of the SMI, so the rotation worked in its favour, and third-quarter results justified it: Nestlé reported better volumes, Roche grew sales by 7% at constant currencies and Novartis raised its guidance. The SMI gained 7.1% to a record 14,810.66 in October and ended the first week of November level. Swiss companies linked to AI investment were sold regardless of their results: VAT fell 16.5% and ABB 11% although both reported record orders.

Bonds

The flight out of technology shares also pushed money into government bonds. The 10-year Treasury yield fell 36 basis points in October to 4.93%, its largest monthly decline since December 2023, and eased further to 4.86% by 6 November. The Fed held rates at 3.75% to 4.00% on 28 October, but the labour market keeps a hike on the table: October payrolls rose by 165,000 against about 65,000 expected, and futures put the probability of a December hike at around 77%. Longer maturities had a good month, but a further hike could reverse part of it.

Energy is now driving inflation in Europe. Euro area inflation reached 4.0% in October, and the ECB, which held its deposit rate at 2.50%, has signalled that a December hike is possible. Swiss inflation rose to 1.5% against 1.3% expected, higher than any forecast in the Bloomberg survey. That is unusual, because the strong franc normally keeps imported inflation low in Switzerland. This time heating oil, petrol and diesel passed through directly, partly because the franc had weakened earlier in the year. Core inflation stayed at 0.5%, so the SNB is likely to treat the rise as temporary at its assessment on 10 December, which keeps Swiss franc bonds stable.

Our bond component gained 0.94% in October, for different reasons in each fund. The PIMCO Income Fund, half of the component, returned 1.8% in francs because it also holds long duration and many US mortgage-backed securities. The UBS fund in Swiss franc corporate bonds was close to flat. The Storm Bond Fund, which invests in Nordic high-yield bonds, is the best of the three this year, up about 1.3% in francs. Its short duration of 1.2 years kept it out of the rise in yields, and coupons of around 7%, many from energy-related issuers, kept the income flowing.

Real Estate (Switzerland)

Lower long-term rates gave Swiss property some support late in the month, as mortgage rates eased from their annual high in early October to an average of 1.72% for ten-year fixed loans. Listed funds still only moved sideways, because investors already pay an average premium of about 26% over net asset value, which limits the upside; the SWIIT index is down about 2% this year.

Our real estate component gained 0.87% in October. It holds six listed funds in equal weights, and about three quarters of their portfolios are residential, with a strong presence in the Lake Geneva region. Residential property is where Swiss demand is most reliable, because vacancies are low and new supply is scarce, and the October returns followed that pattern. Immofonds gained 2.9%, supported by strong annual results with a 13.6% performance for the year to June, the residential funds Foncipars and La Foncière rose 1.1% and 0.8%, while the mixed-use Sima fund slipped.

Commodities

Oil moved with the headlines from the Gulf. Brent rose 13.6% in October as the attacks around Hormuz raised the risk premium, with the expiring December contract settling at $117.64 a barrel. Hopes for a deal then shrank that premium quickly, and the front-month contract fell about 13% to $98.32 in the first week of November. Higher oil prices helped energy stocks, including those in our North American Income holdings, but they also fed the inflation that now worries central banks.

Gold lost about 7% in dollars in October as investors cut crowded positions, then recovered about 5% in the first week of November, including 3.4% on the day after the midterms.

The franc strengthened further, with USD/CHF falling from 0.835 at the end of September to 0.819 on 6 November and EUR/CHF from 0.947 to 0.914. Foreign returns shrink when converted into francs: the weaker dollar alone took about 1.4 points off the October return of US investments.

Everon Strategies and Portfolio Positioning

Income Strategies

Our Income strategies invest in a broad set of dividend payers and limit the weight of each position, so that no single large stock or theme dominates. The aim is a steadier path than the market, with smaller setbacks. As investors moved into companies with stable cash flows, Income 100 CH gained 6.46%, its best month this year, and Income 80 CH returned 5.34%. Several stocks that we hold at a higher weight than the benchmark contributed: Swisscom rose 10.3% as a defensive holding, SGS 8.7% after solid third-quarter growth, Lonza 12.0% after setting ambitious medium-term targets at its capital markets day, and Emmi 8.9%. When technology shares collapsed in early November, Income 100 CH still gained 0.31%, ahead of its benchmark (+0.14%) and the SMI (-0.1%), because it holds very little in AI-related stocks. Since the start of the year its annualised volatility has been 9.9%, against 12.7% for the benchmark, and its largest drawdown 6.7%, against 9.0%. That is the result the strategy is designed to deliver.

Chart 1: Income 100 CH against the iShares Swiss Dividend ETF (CH), rolling three-month volatility, annualised, in Swiss francs. The chart shows the rolling three-month figure; the 9.9% quoted in the text is the figure since the start of the year. Source: Everon AG, own calculation; market data: Refinitiv.

Chart 2: Income 100 CH against the iShares Swiss Dividend ETF (CH), drawdown from the previous high, in Swiss francs, since the start of 2026. Source: Everon AG, own calculation; market data: Refinitiv.

The North American component follows the same logic. It holds 34 dividend payers in the US and Canada, such as Johnson & Johnson, AbbVie, Coca-Cola, Procter & Gamble and Exxon Mobil, with no position above 4.5%. Since the last rebalancing on 15 October it has gained 2.2% in francs, while the S&P 500 lost about 6% in francs, because health care, consumer staples and energy rose while the index was pulled down by its large technology weights. In Switzerland Income 100 CH rose 6.46% in October, carried mainly by Nestlé, Roche and Novartis.

Multi-Factor Strategies

Multi-Factor 100 CH returned 4.26% in October, and Multi-Factor 40 CH, with its bond allocation, gained 1.91%. The Swiss equity component shares the defensive core of the market, with Nestlé, Novartis and Roche at around 9% each, complemented by quality companies such as Lonza and Swisscom, which both gained more than 10%. It also holds more industrial suppliers with strong growth and quality scores, such as ABB, VAT, Inficon and Accelleron, and some of these gave back ground as the market sold anything linked to AI investment. In the first week of November both strategies held steady, at -0.75% and -0.10%.

Our global Multi-Factor strategies hold half of their equities in Switzerland, more than the few percent a global index allocates. The remaining equities are split 30% North America and 20% Europe. Swiss companies combine high quality with share prices in our clients’ currency, and in these weeks that choice paid off. Multi-Factor 100 Global lost 0.52% in francs in October, while the MSCI World lost about 2.5% in francs, and in the first week of November it fell 2.0% against about 2.9% for a global equity ETF. The North American component, where technology leaders such as Nvidia, Microsoft and AMD carry larger weights, lost 5.3% in October and 4.8% in early November in francs, hit by the sell-off and the weaker dollar. The Swiss component absorbed almost all of that loss in October.

Outlook

The AI sell-off and the midterms are now one story. Demand for AI computing is still growing, but financing is getting more expensive and local politics can now delay new data centres. We expect markets to keep separating companies that pay for AI spending out of their own cash flow from those that depend on debt. Our Multi-Factor strategies therefore hold technology through established, profitable companies and none of the neocloud operators, and our Income strategies only through dividend payers such as IBM and Qualcomm.

Central banks are the near-term risk. A strong US labour market keeps a Fed hike in December likely, the ECB is weighing one as well, and the SNB decides on 10 December with inflation above its own forecast. Oil has given back most of its October gains, but the Iran conflict can push it higher again at short notice.

After the October rally Swiss stocks are no longer cheap, so we keep position sizes disciplined and stay diversified across regions and factors, with a clear anchor in Switzerland.

Your Everon Investment Team