Please see below, today’s Daily Investment Update from Brooks Macdonald which highlights the key factors currently affecting global investment markets.
What has happened?
Markets were relatively steady yesterday, with the S&P 500 (+0.28%) closing within 1% of its record high after the Federal Reserve left interest rates unchanged. European equities struggled for direction as higher energy prices added to inflation concerns, leaving the STOXX 600 (+0.07%) and FTSE 100 (+0.07%) broadly flat. Brent crude settled +1.26% higher at $115.32/bbl, although oil prices retreated overnight amid reports of renewed US-Iran outreach.
The Fed keeps its options open
The Federal Reserve kept interest rates unchanged at 3.75-4.00%, as expected, although two policymakers voted for a 25bp increase. The Fed upgraded its assessment of economic activity from “solid” to “strong”, while Chair Kevin Warsh emphasised the resilience of growth and stopped short of describing financial conditions as tight. The message was therefore one of patience rather than a clear shift away from further tightening. Markets nevertheless pared back expectations for rate rises following the press conference, contributing to a steepening of the US Treasury yield curve and some weakness in the dollar.
The Budget buys some breathing room
In the UK, Chancellor John Healey’s first Budget was comparatively measured, combining targeted support for households and businesses with tax increases and reduced near-term fiscal headroom. The OBR now expects UK growth of 1.2% this year but just 1.0% in 2027, while fiscal headroom falls to £15bn in 2029-30 before recovering to £22bn the following year. Overall, the Budget appears to have bought the government some breathing room without materially changing the longer-term fiscal challenge
Big tech faces a higher bar
Technology earnings provided a more cautious backdrop overnight. Alphabet shares fell almost -10% in after-hours trading after Google Services revenue disappointed expectations, with investors also questioning whether returns from AI investment can keep pace with rapidly rising capital expenditure. Samsung Electronics fell around -5% in Asian trading after profits in its chip business disappointed, while Microsoft provided a brighter spot, rising around +3% after cloud revenue exceeded expectations. The contrasting results have nevertheless weighed on the broader technology sector, with Nasdaq futures lower this morning.
What does Brooks Macdonald think?
Attention now turns to the ECB, which is widely expected to leave rates unchanged today, as well as another busy round of corporate earnings. More broadly, yesterday highlighted two themes likely to remain important for markets. First, resilient economic growth is being balanced against persistent inflation pressures, particularly from energy, leaving central banks with limited room to manoeuvre. Second, strong technology earnings alone may no longer be enough to satisfy investors, with greater scrutiny on whether heavy AI investment can translate into sustainable cash flows and profits.
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Andrew Lloyd
29th October 2026