Global market update November 2026

Higher interest rates, stubborn inflation and rising oil prices are making the outlook more complicated for investors. Yet despite these pressures, there are still encouraging signs of strength in the global economy.

Australia’s Reserve Bank raised the cash rate to 4.85% on 3 November, responding to inflation that has proved harder to contain than expected. Meanwhile, US business activity remains strong, China’s economy has performed better than forecast and some of Europe’s financial pressures have eased.

So, where does that leave investors?

Our November global market update examines the developments supporting markets, the risks that deserve attention and three possible scenarios for the months ahead.

The central outlook remains broadly positive, supported by company earnings, investment and ongoing economic activity. However, higher borrowing costs and geopolitical uncertainty could create further volatility.

Despite the challenges facing the global economy, several developments offered reasons for cautious optimism.

US business activity remains strong. October’s composite Purchasing Managers’ Index (PMI) reached 57.6, comfortably above the 50-point level that separates expansion from contraction. Both manufacturing and services continued growing, suggesting that businesses remain active despite higher financing costs and economic uncertainty.

US layoffs remain relatively low. Weekly jobless claims fell to 194,000 in mid-October, their lowest level since July. While other employment figures suggest hiring has slowed, the relatively low number of people seeking unemployment benefits indicates that many employers are retaining staff. This helps support household spending, an important driver of the US economy.

China’s economy performed better than expected. Annual economic growth reached 4.5% in September, supported by firmer factory production, retail spending and targeted government stimulus. Stronger Chinese demand matters to Australia because of its influence on commodity exports and the broader regional economy.

Some international financial pressures eased. France avoided a credit rating downgrade, helping calm concerns about European government debt. Japan also recorded strong demand for its 20-year government bonds, reducing immediate fears of instability in its bond market.

These developments suggest that global economic activity retains some momentum, even as investors face a more demanding interest-rate environment.

Australian interest rates increased again. The Reserve Bank lifted the cash rate to 4.85% on 3 November, its fifth increase in 2026. Annual inflation reached 4.3% in September, while underlying inflation also remained elevated. Higher rates place additional pressure on mortgage repayments, household spending and business borrowing. With inflation proving persistent, the possibility of further tightening remains an important risk.

Australia’s economy is showing signs of strain. September employment data showed a loss of 39,300 jobs, while unemployment rose to 4.7%. Manufacturing activity also weakened. For Australian businesses, the combination of slower growth and higher borrowing costs is becoming increasingly difficult.

US inflation is complicating the interest-rate outlook. Although the Federal Reserve had begun reducing rates, September inflation remained elevated at 3.7%. Expectations of further rate increases returned, contributing to uncertainty around financial conditions and investment valuations.

Oil prices and global borrowing costs have climbed. Escalating conflict involving Iran and attacks on Middle Eastern energy infrastructure pushed Brent crude to US$116.72 a barrel on 23 October. Higher energy costs can feed into inflation, while rising long-term government bond yields make borrowing more expensive for businesses and households.

The concern is how these pressures interact. Higher energy costs can keep inflation elevated, limiting central banks’ ability to support weakening economic growth.

The November Monthly Review presents three potential outcomes for markets over the coming months. These are scenarios, not predictions or guaranteed results. The probabilities below are reproduced directly from the underlying investment commentary.

The most likely scenario is continued global growth, although markets may experience periods of volatility.

Company profits remain relatively resilient, supported by consumer activity, government spending and substantial investment in technology.

Artificial intelligence continues to drive significant business expenditure, particularly on infrastructure, computing capacity and the equipment needed to support expanding demand. Strong company earnings and investment remain important foundations for market performance.

However, rising oil prices and borrowing costs have increased the risks.

Australia faces particular challenges as households adjust to higher mortgage repayments and reduced spending power. Slowing consumer activity could affect businesses that depend heavily on discretionary purchases.

The base case assumes the global economy continues growing, while investors remain selective about which businesses are best positioned to manage higher costs and slower demand.

The downside scenario involves a sharper reduction in household and business spending, placing company earnings and share markets under pressure.

Higher energy prices, persistent inflation and disruptions to global supply chains could make it difficult for central banks to lower interest rates.

At the same time, elevated government borrowing costs may limit the ability of policymakers to support weakening economies.

Technology shares present another potential vulnerability. If concerns about the financing of AI infrastructure cause investment to slow, highly valued companies could experience significant price declines.

For Australia, further interest-rate increases and weaker Chinese demand would add pressure to households, businesses and resource exports.

Under this scenario, the source commentary favours a more defensive approach, including greater cash holdings and reduced exposure to more volatile investments.

The optimistic scenario assumes geopolitical tensions ease, inflation pressures moderate and financial conditions become more supportive of growth.

A reduction in energy prices could ease pressure on household budgets and business operating costs. Improved supply-chain conditions would also help contain inflation.

Lower long-term borrowing costs could support investment valuations, while stronger corporate profitability and continued spending on AI infrastructure would provide additional momentum.

In Australia, an earlier peak in inflation could allow the Reserve Bank to stop increasing rates, giving households and businesses some relief.

Under these conditions, growth-sensitive sectors such as industrials, materials and banks could benefit as economic confidence improves.

November’s developments highlight an important distinction: an economy can continue growing while investment conditions become more difficult.

Strong company earnings and business investment provide support, but higher interest rates affect company valuations, borrowing costs and consumers’ ability to spend.

For Australian investors, the RBA’s latest decision makes the domestic outlook particularly important. Business owners may also be considering what higher financing costs mean for investment decisions, cash flow and the value of their assets.

The November review’s base case remains constructive, but its downside scenarios reinforce the importance of understanding how a portfolio could respond to weaker growth or prolonged inflation.

A long-term investment strategy should account for different market conditions rather than depend on a single economic forecast.