Key Focus This Week: 

This week focus: Central Bank Policy Divergence, Inflation Pressures and Technology Stock Volatility

Global financial markets faced a challenging week as investors assessed diverging central bank decisions, persistent inflationary pressures, and renewed volatility in technology stocks.

The Federal Reserve maintained its policy rate at 3.75%–4.00%, while the Bank of Canada raised its overnight rate by 25 basis points to 2.50%. In the United States, third-quarter GDP growth remained relatively strong, although inflation continued to run above the Federal Reserve’s target.

Meanwhile, concerns over the scale and expected returns of artificial intelligence-related investments weighed on major technology stocks toward the end of the week. Elevated energy prices and geopolitical risks also remained important considerations for investors.

Last Week’s Key Economic Data & News Recap

Federal Reserve Holds Rates Steady Amid Divided Committee

On October 28, the Federal Reserve maintained the federal funds rate at 3.75%–4.00%. The decision passed by a 10–2 vote, with two members dissenting in favour of a 25-basis-point rate increase.

The decision reflected the Fed’s continued assessment of economic conditions and inflationary pressures. While economic activity remained resilient, persistent inflation continued to complicate the outlook for monetary policy.

Bank of Canada Raises Policy Rate by 25 Basis Points

The Bank of Canada raised its overnight rate by 25 basis points to 2.50% on October 28. The decision reflected ongoing inflationary concerns, particularly those associated with higher energy prices, alongside an improving assessment of Canadian economic growth.

The rate increase marked a divergence from the Federal Reserve’s decision to maintain its policy rate, highlighting the different economic conditions and inflation dynamics facing the two central banks.

U.S. Economic Growth Remains Strong, While Inflation Stays Elevated

The U.S. Bureau of Economic Analysis reported that real GDP increased at an annualized rate of 3.4% in the third quarter of 2026, according to its advance estimate.

Meanwhile, the September Personal Consumption Expenditures (PCE) Price Index increased 0.5% month over month and 3.6% year over year. Core PCE inflation rose 0.3% month over month and 3.1% year over year. Although nominal personal consumption expenditures increased, real consumer spending was essentially unchanged.

These figures highlighted the contrast between relatively resilient economic growth and continued inflationary pressures.

Canadian Economic Activity Shows Limited Momentum

Statistics Canada reported that real GDP by industry was unchanged in August, marking the second consecutive month without growth. The preliminary estimate indicated that economic activity declined by 0.1% in September, while third-quarter GDP growth was estimated at approximately 0.3%.

The data suggested that Canada’s economic momentum remained modest, even as the Bank of Canada adjusted its policy rate in response to inflationary pressures.

Technology Stocks Face Renewed Pressure Amid AI Spending Concerns

Major technology stocks came under pressure toward the end of the week as investors reassessed the costs and expected returns of large-scale artificial intelligence investments.

Alphabet shares declined approximately 12.6% on October 29, while Intel fell approximately 28.6% on October 30. Concerns surrounding capital expenditure requirements, data-centre investment, and the pace at which AI-related spending may translate into earnings weighed on market sentiment.

Amazon also attracted attention following its outlook for the holiday quarter, as investors continued to evaluate the balance between its growth expectations and substantial infrastructure spending.

Oil Prices Remain Elevated Amid Geopolitical Risks

Oil prices remained elevated during the week amid ongoing supply concerns and geopolitical tensions surrounding the Strait of Hormuz, a strategically important route for global energy shipments.

As of October 30, WTI crude oil was trading at approximately US$102.84 per barrel, while Brent crude reached approximately US$117.64 per barrel. Continued uncertainty surrounding energy supply remained an important factor for inflation expectations and broader market sentiment.