For the week ending 6 November 2026
As of midday Friday, global equities were sharply lower on the week amid a significant selloff in AI-linked shares on concerns that the results of the US midterm elections could slow the pace of datacenter development. The SOX semiconductor index fell more than 12% on Thursday, while high-yield credit spreads widened. The yield on the US 10-year Treasury note fell to 4.86% from 4.94% last Friday, while the price of a barrel of West Texas Intermediate crude oil fell $13 from a week ago to $91. Volatility, as measured by futures on the CBOE Volatility Index (VIX), jumped to 24.2 from 19.3.
MACRO NEWS
Midterm elections flip control of Congress
The United States midterm elections shifted control of Congress to the Democrats, increasing the likelihood of political gridlock during the remainder of President Donald Trump’s term. The result may limit the scope of major legislation and turn investor attention toward fiscal negotiations, the debt ceiling, and other areas where a divided government could complicate policymaking.
The election outcome could also affect the expansion of datacenter capacity. Democrats won gubernatorial races in several states that have significant datacenter investment, including Texas, Ohio, and Georgia. The results may lead to greater scrutiny of power demand, infrastructure costs, and other issues tied to the buildout. Additionally, several dozen local datacenter moratoriums passed on Tuesday in a number of different states, helping undermine AI-related securities on Thursday.
US payrolls surprise to the upside
The US economy added 165,000 new jobs in October, while the prior two months’ payrolls were revised up by an additional 84,000 positions. The unemployment rate fell 0.1% to 4.1% last month, while average hourly earnings advanced 3.1% year over year. The jump in payrolls more than doubled economists’ forecasts. The strong jobs data likely leaves room for the Fed to tighten policy further if it sees a need. Recent market turmoil has lowered the odds of a December hike to about 78% from over 90% in mid-October.
Iran diplomacy continues amid threats of a wider war
Diplomatic efforts intensified this week, but the outlook remains uncertain. President Trump said the US would not strike Iran immediately and that talks were making progress, while Secretary of State Marco Rubio said the president prefers diplomacy to renewed military action. Gulf countries continued to press for an agreement, as they remain concerned that Iran could retaliate against regional infrastructure.
Iran’s supreme leader also warned that the conflict would widen if Washington resumed attacks. However, Reuters reported on Friday that Iran sent the US a proposal regarding its nuclear program via Qatar, though Iranian officials specified that it is only to be discussed after the US meets Tehran’s long-standing list of demands. The US is reportedly reviewing the offer. Oil prices fell sharply during the week as investors assessed the possibility that the election results could accelerate diplomacy between the two countries.
QUICK HITS
Purchasing managers’ indices ticked up in the United Kingdom but mostly softened elsewhere. Unrest in France was a particular drag on the European services sector.
| Country or Region | Manufacturing PMI | Services PMI | Composite PMI |
|---|---|---|---|
| US (ISM) | 55.5 from 54.5 | 54.5 from 54.9 | n/a |
| Eurozone | 52.7 from 52.9 | 51.4 from 53.0 | 51.7 from 53.1 |
| United Kingdom | 52.8 from 51.9 | 52.8 from 52.1 | 52.9 from 52.0 |
| Japan | 53.3 from 54.1 | 52.0 from 53.0 | 52.3 unch |
| China | 49.3 from 50.1 | 49.7 from 50.2 | 49.7 from 50.7 |
| Global (JPM) | 52.6 from 53.0 | 53.2 from 54.5 | 53.2 from 54.3 |
US nonfarm productivity rose at a preliminary 3.6% annual rate in Q3, while Q2 productivity was revised up to 1.9% from 1.4%. Unit labor costs fell 0.7% in Q3, suggesting wage pressures are not a source of inflation.
NY Fed President John Williams said Friday that inflation is “absolutely too high” while noting inflation expectations remain “well anchored” and wage inflation muted. Now is the appropriate time to accumulate more information to helped determine the Fed’s next move, Williams added.
September US job openings increased, with the openings rate rising to 4.5% from 4.3%. The quits rate rose to 2.1% from 1.9%, suggesting a bit more dynamism in the US labor market. The layoffs rate edged down to 1%.
Eurozone consumer price inflation accelerated to 4% in October from 3.8% in September.
The Bank of England raised its policy rate to 4% this week from 3.75% and said absent a resolution in the Middle East, another hike is likely.
The People’s Bank of China announced steps to ease monetary conditions and support equities. It designated the 1.25% overnight reverse repo rate as its main policy rate and announced a one-year swap operation for brokerages and investment funds. As Beijing increased support for the equity market, China’s state-backed funds recorded the second-largest exchange-traded fund inflow on record, Bloomberg reported.
Goldman Sachs raised its oil price forecasts, citing elevated supply risks. The firm expects Brent crude to reach $105 per barrel in December and average $88 in 2027, with a wide range of potential outcomes.
The Canadian economy shed 4,700 jobs in October, pushing the unemployment rate up to 6.7% from 6.5% in September.
The Reserve Bank of Australia raised its policy rate to an 18-year high of 4.85% this week and said it does not see inflation returning to target until late 2027.
The International Energy Agency predicts a record 3% decline in global liquefied natural gas supply this year. The forecast assumes trade through the Strait of Hormuz remains substantially disrupted through at least year end.
The US Treasury said coupon auction sizes are likely to remain steady for the next several quarters. Treasury advisers generally agreed that any additional issuance should be concentrated in maturities from 2 to 10 years.
The continuing resolution funding the US federal government expires on December 11, setting up a final fiscal test for the outgoing Republican-controlled Congress.
Security guards at the Californian ports of Los Angeles and Long Beach threatened to strike. A work stoppage at the nation’s largest port complex could add to supply pressures and exacerbate sticky inflation.
The US said it would end foreign aid to Israel this year, accelerating an expected phaseout of support.
EARNINGS NEWS
With about 88% of the constituents of the S&P 500 Index having reported, blended earnings per share (which combines reported data with estimates for those companies that have yet to report) rose 31.3% compared with the same quarter last year, according to data from FactSet. Blended sales rose 14.3% over the same period. According to FactSet, earnings growth for the five Magnificent 7 companies that have reported so far was 22.6%, below the 33.6% expected at the end of the third quarter. By comparison, earnings growth for the rest of the S&P 500 rose to 32.6%.
THE WEEK AHEAD
Monday: NY Fed inflation expectations survey
Tuesday: US CPI
Wednesday: Japan PPI
Thursday: UK GDP; US existing home sales
Friday: Eurozone GDP, trade balance, unemployment; US PPI
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The information included above, as well as individual companies and/or securities mentioned, should not be construed as investment advice, a recommendation to buy or sell, or an indication of trading intent on behalf of any MFS product.
Securities discussed may or may not be holdings in any of the MFS funds. For a complete list of holdings for any MFS portfolio, please see the most recent annual, semiannual, or quarterly report. Full holdings are also available on the individual Fund Summary tab in the Products section of mfs.com.
The views expressed in this article are those of MFS and are subject to change at any time. No forecasts can be guaranteed.
Past performance is no guarantee of future results.
Sources: MFS research, Wall Street Journal, Financial Times, Reuters, Bloomberg News, FactSet Research, S&P Global Market Intelligence, LSEG.
AUTHOR
Jamie Coleman
Senior Strategist,
Strategy and Insights Group