Houthi strikes on Saudi Arabia lift Brent to five-month high as gold breaks below $4,000; Meta sparks AI selloff ahead of central bank super week

Houthi attacks on Saudi Arabia widened from an airport to an oil field, and the United States ordered some personnel to leave the kingdom. Brent crude rose about 6% over the week and settled at $116.72 a barrel on Friday, its highest since late April. Higher oil prices reinforced inflation concerns, lifting the market-implied probability of a Federal Reserve rate increase in December to about 78%, and gold fell below $4,000 an ounce. In technology, Meta narrowed its full-year capital expenditure guidance by raising the lower end and announced plans to issue non-voting shares, reviving doubts about returns on AI investment. The Nasdaq Composite tumbled 2.6% on Thursday, its worst day since June, while safe-haven demand pushed Treasury yields sharply lower and strengthened the yen. For the week, the Nasdaq fell 0.7% and the S&P 500 lost 0.5%, while the Dow posted a third straight weekly gain. The Federal Reserve, the European Central Bank and the Bank of Japan will each announce rate decisions this week.

Weekly overview: Conflict spreads to Saudi energy facilities as oil lifts rate-hike bets

On October 21 local time, Saudi air defences intercepted a drone over the Shaybah oil field operated by Saudi Aramco, and the Saudi energy ministry said falling debris killed two people. The US State Department ordered non-emergency government personnel and their family members to leave Saudi Arabia the same day (US Eastern Time). That evening, King Fahd International Airport in Dammam came under attack; the General Authority of Civil Aviation updated the toll on October 22 to two dead and eight injured.

Supply concerns drove oil prices steadily higher and quickly fed into rate expectations. According to Reuters, citing CME FedWatch, as of October 23 markets priced in about a 92% probability that the Fed would hold rates this week and about a 78% probability of a rate increase in December.

Foreign exchange: Yen strengthens on safe-haven demand, touching a more-than-one-month high

The tech selloff fuelled safe-haven demand. USD/JPY fell 0.82% to 156.83 on October 22 and dropped as low as 156.06 on October 23, leaving the yen at its strongest level in more than a month. Japan's September core CPI, which excludes fresh food, rose 2.1% year on year, accelerating from 1.7% in August and moving back above the Bank of Japan's 2% target for the first time in nine months.

The dollar index stood near 101.8 on Friday, broadly unchanged on the week. EUR/USD traded near 1.1200, down about 0.4% for the week.

Oil: Brent gains about 6% on the week to settle at its highest since late April

During Asian trading last Monday (October 19), Brent fell as much as about 2% to $107.57 a barrel on news that the United States had eased sanctions on Russia, a move that could benefit Russian oil exports.

Middle East tensions then took over. On October 22, December Brent rose 4% to $113.17 a barrel and December WTI gained 2.4% to $99.47, touching $100 intraday for a third straight session. Iran's Islamic Revolutionary Guard Corps said it had attacked four tankers in the northern Persian Gulf, a claim not yet independently verified. On October 23, Brent rose a further 3.1% to $116.72 and WTI climbed 3.8% to $103.27.

Gold: Breaks below $4,000, on track for worst week since June

Rising oil prices lifted inflation and rate-hike expectations, while margin-call selling triggered by the tech slide added to the pressure, and precious metals weakened across the board. On October 22, gold fell about 2.9% and silver tumbled nearly 6%. On October 23, spot gold fell below $4,000 for the first time since mid-July, touching an intraday low of $3,975.23, while December gold futures settled 1.3% lower at $4,007.90. As of midday US Eastern Time on October 23, gold was down about 4% for the week, on track for its worst week since June.

Equities: Meta triggers tech selloff, Nasdaq drops 2.6% on Thursday

Major technology companies reported earnings in quick succession. Netflix posted third-quarter revenue of about $12.87 billion, up about 12% year on year, but cut its full-year advertising revenue forecast from about $3 billion to about $2.7 billion, and its shares fell more than 5% after hours. Tesla's third-quarter revenue was about $28.05 billion, roughly flat from a year earlier; adjusted earnings per share of $0.48 beat expectations of $0.45.

Meta's third-quarter revenue rose 26% year on year to $64.6 billion, ahead of expectations, but operating income fell 37%, weighed down by a $9.89 billion legal settlement charge. Quarterly capital expenditure reached $34.91 billion, up 80% year on year. The company narrowed its full-year capex guidance from $130–145 billion to $135–145 billion and plans to issue non-voting Class C shares to fund investment in AI and other areas. Meta shares fell about 7% on October 22, and memory chip stocks weakened alongside. The Nasdaq fell 2.60% to 26,008.86 that day, its worst session since June; the S&P 500 lost 1.21% and the Dow was little changed. Money flowed into Treasuries, and the 10-year yield fell about 18.5 basis points to around 4.96%.

On October 23, further gains in oil revived inflation worries, the 10-year Treasury yield climbed back to around 5%, and the selling spread beyond technology, with the Dow falling 1.2%. At the close, the S&P 500 stood at 7,623.68, down 0.5% for the week; the Nasdaq ended at 25,955.34, down 0.7% for a second straight weekly loss; the Dow finished at 52,215.16, up 0.4% for a third consecutive weekly gain; and the Russell 2000 rose 2% for the week.

Cryptocurrencies: Heavy ETF swings as Bitcoin briefly slips below $80,000 over the weekend

US spot Bitcoin ETFs drew combined net inflows of more than $1 billion from Monday to Wednesday, then swung to net outflows of $635.6 million on Thursday, the largest single-day outflow since June, followed by further outflows of about $138 million on Friday. Bitcoin weakened alongside tech stocks, falling about 3.3% to around $81,200 on October 22. At around 23:20 Beijing time on Saturday, October 24, Bitcoin briefly dropped to about $79,280, and roughly $400 million in long positions were liquidated within four hours.

Events to watch this week (Beijing time)

Risk notice: This material is for reference only and does not constitute investment advice. Financial markets involve risk, and past performance does not indicate future results.