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Matthias Knab, Opalesque:

Equities still look more attractive than fixed income, but Credit Mutuel Asset Management has moved to a more neutral stance after many months of being positive. In the firm's November outlook, senior strategist Francois Rimeu points to growing doubts over AI spending, rising energy prices and political uncertainty after the US midterm elections.

Earnings hold up, tech sells off

Rimeu notes that earnings seasons have historically supported equity markets, but that this only partly held true in recent weeks. The S&P 500 fell 0.87% in October, and the wider tech sector fell further. Europe did better, with the Stoxx 600 up 1.87%.

US earnings have been broadly solid, with upward revisions to margins, revenues and earnings. That was not enough to calm investors who question whether the AI-driven rally can continue. Some companies were punished severely: Intel fell more than 45% on disappointing Q4 guidance, Sandisk lost 35% despite strong results and upward revisions, and Google dropped 13% in a single session after search revenues missed expectations.

According to Rimeu, these sharp sell-offs reflect broader doubts about the pace of AI investment, its future return on investment and whether high earnings expectations can be sustained. The gap between index performance and earnings growth shows this clearly: the S&P 500 is up "only" 11.7% through end-October, while earnings are expected to grow 33%. As a result, the 12-month......................

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