Disappointing earnings reports from technology companies and concerns over AI capital expenditures drove the Nasdaq down 5.34% in October, rippling across international indices. The MSCI ACWI (All Country World Index) ex USA was down 2.80% for the month but up 11.45% year to date. (January 1-October 30, 2026). The MSCI USA Index was down 0.97% for the month but up 11.54% year to date.
The MSCI AC Asia Index was down 6.88% for the month, as the sell-off in technology stocks contributed to the fall in the four largest constituent indices: Japan, Taiwan, South Korea and China. Some funds rotated into the Indian market which was up 1.23%. With good returns for selective mining, energy and technology stocks, the MSCI Australia Index was up 3.64%. Year to date the MSCI AC Asia index was up 16.45%.
Many observers of Brazil were caught off guard by the re-election of President Luiz Inácio Lula da Silva on October 26. Investors fear his administration may lead to expanded public spending, larger deficits and heavier state intervention. The MSCI Brazil index fell 12.02% for the month and led the MSCI EM Latin American Index down 7.57% over the same period. Year to date, this regional index was up 6.50%.
Anchored by the UK – the largest regional market – the MSCI AC Europe index eked out a .28% return for October. Benefitting from top-ten exposure to financials, mining, pharmaceuticals and energy stocks, the MSCI UK index was up 2.37% for the month. Rotation into defensive stocks also led to a rise in the MSCI Switzerland index of 8.32% for October. On the other hand, led down by lithography systems manufacturer ASML, the MSCI Netherlands index fell 9.07%. Year to date, the MSCI AC Europe index was up 7.27%.
With a significant weight in financials and energy, the Canadian market also benefited from investor rotation into value stocks. The MSCI Canada index was up 3.84% for the month and 13.63% year to date.
In my opinion, October’s events offered opportunities as well as challenges, as equities in some countries and industries became attractive to investors looking for strong intrinsic value. The November U.S. midterms could present similar opportunities and challenges, as the resulting makeup of the U.S. Congress could influence the long-term U.S. stance on tariffs, geopolitics, and AI. Hopefully, this will result in an interesting November letter.
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