Two Fed dissents for a hike and hotter PCE; Alphabet and Intel slump as Nasdaq falls for a third week; Binance hit by biggest crypto hack on record

The Federal Reserve, the European Central Bank and the Bank of Japan all left interest rates unchanged last week, but two Fed policymakers voted for a rate increase. The US PCE price index rose 3.6% year on year in September, keeping expectations of a December hike elevated, and gold fell below $3,900 an ounce. Big Tech earnings diverged: Microsoft reported strong cloud growth, while Alphabet tumbled about 12.6% in a single session after its free cash flow turned negative, and weak guidance sent Intel to its biggest one-day drop since 1974. The Nasdaq Composite fell 2% for the week, its third straight weekly decline. Crypto exchange Binance suffered a hack of about $6.3 billion, and US spot Bitcoin ETFs recorded their largest single-day outflow since June. ECB President Christine Lagarde announced she will step down early, in February next year. This week brings the US midterm elections, a Bank of England rate decision and, on Friday, the October nonfarm payrolls report.

Weekly overview: Three central banks stand pat as US inflation heats up again

On October 28 (early October 29, Beijing time), the Federal Reserve held the target range for the federal funds rate at 3.75% to 4.00% in a 10–2 vote, with Governor Lisa Cook and Cleveland Fed President Beth Hammack preferring a 25-basis-point increase. The statement upgraded its description of economic activity from "solid" to "strong".

Data released the next day showed inflation pressure still building. US real GDP grew at an annualized 3.4% in the third quarter, according to the advance estimate, after 2.2% in the second quarter. The September PCE price index rose 3.6% year on year, up from 3.4% in August and the highest since May, while core PCE rose 3.1%. Inflation-adjusted consumer spending was flat in September, and the personal saving rate fell to 3.8%, the lowest since October 2022. According to CME FedWatch, as of October 30 markets priced in about a 75% probability of a Fed rate increase in December.

Foreign exchange: Euro touches its lowest since May 2025, yen strengthens for three straight days

On October 29, the European Central Bank kept its deposit facility rate at 2.50% and noted that continued increases in energy prices pose upside risks to inflation. EUR/USD fell that day to its lowest level since May 2025. The ECB also announced that President Christine Lagarde will step down on February 7, 2027, about eight months before her term was due to end in late October 2027.

On October 30, the Bank of Japan held its policy rate at 1.25% and raised its inflation forecasts. A fresh wave of tech selling fuelled safe-haven demand and pulled Treasury yields lower, and the yen strengthened for a third straight session on Friday, with USD/JPY at around 157.5. The dollar index was broadly flat on the day at around 101.88, on track for a second consecutive monthly gain. EUR/USD stood near 1.1168 on Friday.

Oil: Brent gains 13.6% in October for a fourth straight monthly rise

The Middle East swung between escalation and diplomacy last week. US President Donald Trump said on October 25 that he had "a decision to make" on Iran. According to The Wall Street Journal, Washington warned several Gulf countries to prepare for a possible renewal of military action against Iran after the midterm elections. Meanwhile, Qatari mediators presented Iran with a new draft agreement to end the war. Houthi attacks on Saudi Arabia continued, and the Saudi-led coalition said it intercepted a ballistic missile aimed at Taif on October 28.

Oil prices swung at elevated levels. On October 27, Brent fell about 1.6%, and WTI briefly dropped below $100 a barrel intraday. On October 30, the expiring December Brent contract rose 2.4% to $117.64 a barrel, while the more active January contract settled at $113.43; December WTI gained 2.08% to $104.12, up about 0.8% for the week. In October, Brent rose 13.6% and WTI gained 15.2%, both marking a fourth consecutive monthly increase.

Gold: Falls below $3,900, down for a second straight month

Gold briefly rebounded to around $4,016 an ounce early in the week, but came under renewed pressure as the PCE data reinforced rate-hike expectations. On October 30, spot gold broke below $3,900 and was trading near $3,880 late in the US session, down about 3.5% on the day and at its lowest since mid-July. Silver fell about 6%, slipping below $50 an ounce. Gold posted a second consecutive monthly decline.

Equities: Alphabet and Intel slump, Nasdaq falls for a third straight week

After the US close on October 28, Microsoft and Alphabet reported quarterly results. Microsoft's revenue rose 19% year on year to $92.3 billion, and Azure revenue grew 48% to $33.17 billion, sending the shares higher after hours. Alphabet's Google Cloud revenue rose 103% to $30.7 billion, but quarterly capital expenditure reached $51.4 billion, free cash flow was negative $9.1 billion, and both earnings per share and search advertising revenue fell short of expectations. On October 29, Alphabet shares closed down about 12.6%, their biggest one-day drop since the company's 2004 listing; the Nasdaq fell 1.4% that day and the S&P 500 lost 0.3%, while the Russell 2000 rose 1%.

After the close on October 29, Amazon reported third-quarter net sales up 12% to $201.9 billion, with AWS revenue up 39%. However, adjusted earnings per share of $1.89 missed expectations of $1.96, and free cash flow for the 12 months through September was negative $42.4 billion; the shares closed 1.4% lower the next day. Intel forecast fourth-quarter revenue of $15 billion to $16 billion, below market expectations of $17.1 billion, and its shares plunged 28.6% on October 30, their biggest one-day drop since 1974, dragging chip stocks lower across the board. That day the Nasdaq fell 2.9% and the S&P 500 lost 1.8%, both their worst sessions since June.

At the close on October 30, the S&P 500 stood at 7,580.07, down 0.6% for the week; the Nasdaq ended at 25,437.00, down 2% for a third straight weekly loss; the Dow finished at 51,770.31, down 0.9%, ending a three-week winning streak; and the Russell 2000 rose 1.3% for the week.

Cryptocurrencies: Binance hit by a $6.3 billion hack as Bitcoin briefly drops below $77,000

On the afternoon of October 29, US Eastern Time (early October 30, Beijing time), Binance was hit by a hack with losses of about $6.3 billion, the largest cryptocurrency theft on record. Binance said it had worked with partners to freeze part of the affected assets and would cover all user losses. Several blockchain analytics firms linked the attack to the North Korean hacking group TraderTraitor.

Bitcoin fell about 4.3% on October 29, its largest one-day decline of the month, and briefly dropped below $77,000 on October 30. US spot Bitcoin ETFs saw net outflows of $643.3 million on October 30, the largest single-day outflow since June 25, wiping out about 64% of their year-to-date net inflows.

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.