Devon Funds Morning Note - 30 October 2026

Friday 30th October 2026

Markets Diverge as Tech Giants Retreat

Global

US equities were mixed as renewed concerns over AI spending weighed on technology stocks. The S&P 500 fell 0.3% and the Nasdaq declined 1.4%, while the Russell 2000 gained 0.8%.

Alphabet dropped 13.0% as investors focused on heavy capital expenditure, negative free cash flow and slowing search revenue growth. However, its cloud revenue more than doubled to US$30.7bn and its cloud backlog reached US$561bn, highlighting strong AI demand despite uncertainty over the timing of investment returns. Search revenue growth slowed to 12.0% from 17.0% in the previous quarter, raising questions about AI’s impact on Google’s core business.

After-hours results added to the pressure. Amazon fell approximately 7.0% in early trading after missing revenue and earnings expectations, despite AWS growth of 39% exceeding consensus. Intel dropped approximately 17.0%, with management flagging weaker memory demand and pricing, alongside a PC slowdown expected to persist through at least the first half of next year.

Outside the largest technology companies, earnings momentum appeared to be broadening. Bloomberg analysis indicated that earnings growth among the remaining 493 S&P 500 companies was on track to exceed that of the Magnificent Seven, supported by manufacturing investment and resilient consumer spending. US GDP grew at a reported 3.4% pace in the third quarter, its strongest in a year.

Treasury yields eased, with the two-year yield falling four basis points to 4.66% and the 10-year declining two basis points to 4.99%. September headline PCE inflation rose 0.5% month-on-month, largely reflecting oil prices, while core PCE increased 0.3% monthly and 3.1% annually. Despite persistent inflation pressures, traders increasingly expected the Fed to remain on hold for the rest of the year as policymakers sought further data.

Middle East diplomacy remained uncertain as reports suggested the US was seeking renewed direct talks with Iran through Qatari intermediaries. Vice President JD Vance reportedly wrote to Iranian security chief Mohsen Rezaei proposing talks as early as next week and offering to lead the US delegation. Reports differed over President Trump’s involvement, with Trump denying that he had directed Vance to restart negotiations. Iran continued to insist that its conditions, including lifting the US naval blockade and sanctions on oil exports, be met first, leaving little evidence of a substantive breakthrough.

Oil prices were broadly steady, with WTI edging up 0.2% to approximately US$103/bbl and Brent June futures slipping 0.1% to around US$115.60/bbl, as markets weighed diplomatic efforts against the risk of further escalation.

Healthcare led sector gains, rising 2.5%, followed by REITs (+2.3%) and consumer staples (+1.6%). On the downside, commercial services fell 6.6%, while technology declined 1.3%.

Among sub-sectors, household appliances led gains (+7.5%), followed by specialty retail (+5.4%) and pharmaceuticals (+4.0%). Gold recorded the largest decline (−1.9%), followed by systems software (−1.8%) and semiconductors (−1.7%).

In individual stocks, Carvana (+16.9%), Chipotle (+9.6%) and DoorDash (+6.5%) posted strong gains, while Eli Lilly (+6.1%) rallied after a strong Q3 result and raised its full-year sales forecast to $91–92 billion, supported by robust demand for Mounjaro and Zepbound. Vulcan Materials rose 6.0%, while Mastercard (+4.3%) reported a 14.0% revenue growth and better-than-expected earnings, underpinned by resilient US consumer spending.

In contrast, ServiceNow slumped 27.3%, while Marvell (−14.0%) fell on reports of a potential all-stock acquisition of Lumentum, raising concerns over dilution and regulatory complexity. Caterpillar (−9.4%) also fell despite modest earnings and revenue beats, as guidance for moderating Q4 revenue growth disappointed elevated expectations for AI-related power-generation demand. Sandisk (−5.0%), Oracle (−4.8%) and Intel (−4.0%) rounded out the open market declines.

New Zealand

The NZX 50 edged up 0.1%, to 13,710 on Thursday, extending its modest recovery following the Reserve Bank’s surprise decision to hold the Official Cash Rate at 2.75%. Trading was uneven. The rate reprieve supported interest-sensitive stocks, with Spark gaining 2.3%, Argosy Property rising 2.0% and Auckland Airport also advancing.

Serko led the NZX 50 gainers highlighted in Thursday’s market coverage, rising 4.4%, followed by Freightways (3.3%) and Spark (2.3%). Freightways benefited from a strong first-quarter update, with revenue increasing 17.6% and net profit rising 12.0%, supported by market-share gains and pricing initiatives. Spark’s advance reflected renewed support for interest-sensitive stocks following the Reserve Bank’s surprise decision to leave the OCR unchanged. No fresh company-specific catalyst was identified for Serko’s gain.

On the downside, Ryman Healthcare fell 2.5%, followed by Hallenstein Glasson (−2.0%) and Briscoe Group (−1.9%). Their declines contrasted with the broader market’s modest advance.

New Zealand business sentiment remained resilient in October despite renewed oil-price pressures. ANZ’s Business Outlook survey showed net business confidence edging up to 52.5%, while expected own activity eased to a still-strong 46.2%. A net 15.0% of firms reported stronger activity than a year earlier, up from 10.8% in September. Investment and employment intentions softened but remained positive, while services-sector export intentions reached a 25-year high, supported by the weaker New Zealand dollar and strong tourism bookings.

Inflation pressures remained elevated, with a net 52.2% of firms planning price increases over the next three months, the highest proportion since May. The average intended increase rose to 1.92%, while a net 81.9% expected higher costs. One-year inflation expectations edged up to 3.31%. ANZ noted that the latest oil-price shock had not repeated the sharp confidence setback seen in the second quarter, suggesting demand is holding up, although persistent cost and pricing pressures remain a challenge.

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