Tech sell-off worries, UK bank tax talk and EU energy and budget splits: Oct 16 markets wrap

AI-related stocks stayed under pressure this week, the UK chancellor is reported to be preparing a higher tax on bank profits, and EU leaders remain divided on energy prices and the next bloc budget. Oil is heading for a weekly gain on Middle East supply risks.

Maz Vantage ·

Tech and AI stocks stay under pressure

MarketWatch described a "tech wreck" that continued on Thursday, with investors reportedly shifting from technology names towards government bonds and defensive sectors (MarketWatch). Chip stocks including Nvidia and Micron faced renewed pressure, with reported details about Anthropic's financial progress adding to concerns about the health of the AI ecosystem (MarketWatch). Another MarketWatch piece argued the sell-off could worsen after the 3 November US midterm elections if Democrats sweep (MarketWatch).

Sources told Investing.com that investors are tempering their valuation expectations for a potential Anthropic IPO because of a slowdown in revenue growth (Investing.com). The BBC separately reported that the company is courting potential investors ahead of its market debut, while some investors worry about the amount being spent on AI infrastructure (BBC).

Central banks: the Fed under Kevin Warsh

MarketWatch ran a piece on what Fed Chair Kevin Warsh did and did not say on Thursday night, as he had a chance to shape expectations ahead of the central bank's next rate-setting meeting (MarketWatch). Le Figaro reported that Warsh called the rise of AI the most decisive change for the global economy at present (Le Figaro).

On the official side, the Fed published the minutes of its 15-16 September FOMC meeting on 7 October (Federal Reserve). The ECB's account of its 9-10 September meeting came out on 8 October (ECB). Recent ECB speeches have covered AI, including Philip Lane on the AI opportunity for Europe (ECB). The feeds did not provide the contents of these documents, so this summary does not describe them.

UK: surprise growth, a bank tax and corporate deals

The BBC reported that the UK economy grew 0.1% in August, against analysts' expectations of a slight contraction. Chancellor John Healey called it a sign of resilience ahead of the Budget (BBC). Senior bankers told the BBC they expect to be "on the menu" in the Budget later this month, with a higher tax on their profits (BBC). The Guardian's live blog said bank shares dropped on the prospect (The Guardian). Investing.com published an explainer on how the Budget could ripple through markets (Investing.com).

Elsewhere in UK business:

  • Culture Secretary Lisa Nandy said she is "minded to intervene" in Sky's £1.6bn purchase of ITV's entertainment arm, paving the way for deeper scrutiny (The Guardian).
  • Thames Water has asked creditors for a further £2.4bn, telling them it would not otherwise survive long enough to agree a refinancing deal (The Guardian).
  • Balancing Great Britain's power grid now costs nearly £50m a day, the Guardian reported (The Guardian).

Commodities and company news

Oil eased but was set for a weekly gain on Middle East supply risks, according to Investing.com (Investing.com). Nordex shares jumped after its Q3 profit beat consensus and it raised margin guidance (Investing.com). Sources said UBS is exploring options abroad in case Swiss rules prove intolerable (Investing.com).

Europe: energy prices, cars and budgets

EU leaders meeting in Brussels on 15-16 October are divided over how to bring down energy prices, Le Monde reported (Le Monde). France and Germany reached a compromise on the car industry: a softening of the post-2035 ban on combustion-engine cars in exchange for "Made in Europe" protection for the EU market (Le Monde).

On the next EU budget, Le Figaro reported that Emmanuel Macron and Friedrich Merz are at odds, with Germany leading the "frugal" camp calling for large spending cuts (Le Figaro). Macron warned that a deal will be hard to reach in 2027 given France's presidential election (Le Figaro).

France: 2027 budget and purchasing power

French MPs amended the first part of the 2027 finance bill this week. They voted against trimming a tax allowance for retirees, which the public accounts minister said "crushes youth" (Le Figaro). The Assembly also adopted a €30.9bn French contribution to the EU budget (Le Figaro). Consumer prices rose 0.8% between May and September 2026, so the minimum wage (smic) could be raised before January 2027 if prices climb again in October or November (Le Figaro). Le Monde's Décodeurs also looked at whether French purchasing power has really fallen (Le Monde).

Sources