Quarter · Market review
Quarter: growth hopes and higher business costs
German industrial prices and Japanese trade figures on 20–21 October showed how cost pressures that emerged over the summer affect businesses. The quarter combined strong technology suppliers’ sales with large customer investments, interest-rate increases and unreliable energy supplies. Revenue growth and an equity rebound therefore do not establish how much profit companies retain.
Period covered: 2026-07-24 – 2026-10-21Information as of 28 min read
The latest Japanese and German data clarified the gap between revenue and costs. Netflix’s improved quarterly profitability came with a lower advertising outlook, while Korea’s trading direction reversed.
A promise of energy supply is not fuel delivered, and greater technology investment is not an established return on that investment.
Quarter
What happened
July and August: the supply recovery was not sustained
Before the period beginning on 24 July, the euro-area deposit rate had already been 2.25% from 17 June and the US target range was 3.50–3.75%. The European Central Bank’s decision to leave rates unchanged on 23 July is context preceding this period. The Federal Reserve kept rates unchanged on 29 July, within the period reviewed. The US–Iran memorandum of 18 June was not proof of restored shipping; the International Energy Agency’s 10 July report already described ceasefire breaches on 7–8 July.
On 12 August, the agency reported July Persian Gulf oil exports, including routes bypassing the strait, averaging 15 million barrels a day. That was 2.1 million, or about 12%, below June, not a one-day shipping stoppage. On 5 and 8 September, US military command reported strikes on Iranian tankers; these were statements by a party to the conflict, not an independent measure of all flows.
On 23 July, the day before this period began, the European Union’s 21st Russia-sanctions package expanded restrictions on energy, financial services and the shadow fleet. That day, the US Trade Representative announced tariff measures on imports from 60 economies, including the European Union, over insufficient bans on forced-labour goods. Particular tariffs and exemptions depended on the product and its origin.
Technology suppliers earned profits while customers paid for infrastructure
On 29 July, Microsoft reported 41 billion US dollars of capital investment including finance leases for the quarter ending 30 June; cash purchases of property and equipment were 35.8 billion. These amounts are not additive. Operating cash flow was 55.4 billion dollars, leaving 19.6 billion after cash asset purchases. On 26 August, NVIDIA reported 96.221 billion dollars of revenue for the quarter ending 26 July, up 106% year on year; operating profit rose 124%.
Euro-area second-quarter real growth was revised to 0.6% from the previous quarter on 7 September. US selected-service-sector second-quarter revenue growth was revised to 3.0% quarter on quarter on 9 September; this does not remove price effects.
On 9 September, the US Energy Information Administration raised its second-half average Brent forecast to about 90 US dollars a barrel. Model inputs closed on 3 September, so this was neither a measure of later military statements’ effects nor an exchange price. On 11 September, the International Energy Agency forecast a larger decline in this year’s oil supply than demand.
The US August Consumer Price Index published on 11 September showed annual growth of 3.4%, unchanged from July, but seasonally adjusted monthly growth accelerated from 0.1% to 0.4%. Excluding food and energy, annual growth slowed from 2.5% to 2.4%, while monthly growth rose from 0.2% to 0.3%.
Mid-September: interest rates rose while economic signals diverged
On 16 September, the Federal Reserve raised its target rate range to 3.75–4.00%, effective from 17 September. The European Central Bank’s 10 September decision to raise its deposit rate from 2.25% to 2.50% took effect on 16 September. On 18 September, the Bank of Japan set a 1.25% overnight rate target from 24 September, while the Bank of England left its rate at 3.75% on 17 September.
The US 10-year Treasury yield had fallen to 4.96% on 21–22 September but reached 5.18% on 24 September. On 23 September, the preliminary S&P Global US PMI Composite Output Index rose from August’s 56.0 to 58.4. The initial unemployment-claim count for the week ending 19 September, revised on 1 October, was 198 thousand; the week ending 26 September recorded 197 thousand. The earlier estimate for the first week had been 197 thousand.
On 25 September, US August durable-goods orders were 338.6 billion dollars, almost unchanged from revised July. Non-defence capital-goods orders excluding aircraft rose 1.6%, with shipments up 0.6%. However, the final University of Michigan September sentiment index fell from August’s 51.7 to 48.1. Monthly order changes remove seasonality, not price effects; claims are not the number of new jobs.
On 27 September, the White House published proposed US–China tariff-relief product lists, each covering roughly 30 billion US dollars in one trade direction. The US list included plastic tableware and bedding from China; China’s list included US beef and dairy products. At the time of the announcement, this proposed relief was not yet in force. On 28 September, China reported that larger industrial companies’ August profits rose 4.2% year on year, after July’s 11.2%; these are not changes between adjacent months.
30 September: spending held up while energy and technology demand increased
On 30 September, the US Bureau of Economic Analysis reported that real August spending rose 0.6% month on month while real disposable income was unchanged. The Personal Consumption Expenditures Price Index rose 3.4% year on year, or 3.0% excluding food and energy. July’s annual rates were the same in that revised data vintage. Second-quarter real gross domestic product growth was revised from a 1.5% to a 2.2% annualised rate, equivalent to 0.6% from the previous quarter.
Destatis’s preliminary German September figures published on 30 September showed faster price growth; the final estimate on 13 October confirmed this, as discussed below. France’s annual harmonised consumer-price inflation rose from 2.6% to 3.4%.
China’s National Bureau of Statistics reported on 30 September that the manufacturing purchasing managers’ index rose from 49.8 in August to 50.1 in September. Over the same period, the new-orders index fell from 50.6 to 50.5 while the input purchase-price index rose from 56.6 to 60.8.
On 30 September, the US Energy Information Administration reported 427.3 million barrels of commercial crude stocks for the week ending 25 September, 2.6% more than a year earlier. Gasoline stocks were 7.4% lower and distillates, including diesel and heating products, 14.9% lower. More crude was not the same as adequate finished-fuel stocks.
Memory-chip maker Micron reported 54.229 billion US dollars of revenue on 30 September for its quarter ending 3 September, versus 11.315 billion a year earlier. This year’s quarter lasted 14 weeks and the earlier one 13, so the comparison is not equal-length.
Real spending and gross domestic product growth remove price effects; a US annualised quarterly rate is not growth achieved in three months. Consumer-price and consumption-expenditure indices use different baskets and weights; the latter also covers some spending paid on consumers’ behalf. A purchasing managers’ index above 50 indicates broad expansion, not percentage growth of that size; a price index measures how widespread increases are.
1–7 October: fewer new jobs and higher costs
On 1 October, the US Institute for Supply Management’s September manufacturing purchasing managers’ index was 54.5, while prices paid rose from 71.1 to 77.9. The European Central Bank reported August new-mortgage rates of 3.60%, consumer-credit rates of 7.92%, and an almost unchanged corporate borrowing-cost measure of 3.77%. These are euro-area averages for new agreements and do not yet capture September’s rate increase.
On 1 October, Eurostat reported second-quarter Lithuanian housing transaction prices 14.3% higher year on year, versus 4.0% in the euro area. These are prices, not rental income or net investment returns.
On 2 October, the US Bureau of Labor Statistics reported 29 thousand additional non-farm jobs in September after revised August growth of 133 thousand. The combined July–August result was reduced by 60 thousand; July became a loss of 10 thousand jobs. September unemployment was 4.2%. Eurostat’s preliminary estimate that day showed euro-area September consumer inflation rising from 3.2% to 3.8%. On 4 October, seven OPEC+ countries kept September output targets for November, not confirmed actual supply.
On 5 October, the Nasdaq Composite price index rose 1.05% in US dollars from the 2 October close, while the US 10-year Treasury yield rose from 5.28% to 5.31%. The September ISM Services PMI published that day fell from 55.4 to 54.9, while prices rose from 72.6 to 74.0.
On 5 October, Eurostat reported euro-area August industrial producer prices up 1.9% from July: energy rose 5.6%, and industry excluding energy 0.2%. These are domestic-market selling prices, not all production costs or consumer inflation. European Central Bank Executive Board member Philip Lane said that day that dearer energy left families less money for other goods and higher long-term interest rates restrained spending and investment; this was his assessment, not a new decision.
On 6 October, Destatis reported German August factory orders down 10.6% from July, or 0.1% excluding large orders. Ships, aircraft, trains and military vehicles had exceptionally large July orders. Nevertheless, June–August orders excluding large deals were 2.6% below the preceding three months. Orders are not realised revenue; the measure removes price, seasonal and calendar effects, and August figures are preliminary.
On 6 October, Eurostat reported euro-area August retail volumes recovering 0.1% after July’s 0.6% decline. Non-food volumes rose 0.5%, while fuel fell 1.9%. This measures quantities sold after removing price, seasonal and calendar effects, not retailers’ revenue or profit.
The Federal Reserve’s 15–16 September minutes, published on 7 October, showed most participants then expecting another rate increase; this was not a new October decision. The US Treasury’s 39 billion dollar reopening of a 10-year bond that day had a 5.30% high yield and a 2.77 bid-to-cover ratio.
8–9 October: borrowing remained expensive and demand was uneven
On 8 October, Federal Reserve Governor Christopher Waller left another rate increase open if the data developed as he expected. The European Central Bank’s September meeting account, published that day, recalled that energy costs had not yet spread broadly into wages and other prices. This described an earlier meeting, not a new decision.
At the US Treasury’s 22 billion US dollar reopening of a 30-year bond on 8 October, the high yield was 5.618%, versus 5.308% at the same issue’s 10 September auction. On 9 October, reference 2-, 10- and 30-year yields were 4.80%, 5.24% and 5.60%. The first two rose from the previous day’s 4.75% and 5.22%, while the third was unchanged. From 2 October they nevertheless fell by 3, 4 and 3 basis points respectively.
An auction high yield describes one issue; reference yields are derived from constant-maturity US Treasury quotations. Neither is a realised fund return; one basis point equals 0.01 percentage point.
On 8 October, Destatis reported that German August exports fell 0.8% from July to 137.6 billion euros, while imports rose 0.9% to 118.1 billion euros. The goods trade surplus fell from 21.6 to 19.5 billion euros. Exports to the US fell 6.3%, while sales to the euro area rose 0.8%, China 4.7% and the UK 16.7%. US sales were still 22.6% higher than a year earlier. These are seasonally and calendar-adjusted euro values, not physical volumes; the breakdown alone does not establish a tariff effect.
On 8 October, the European Systemic Risk Board’s assessment of its 1 October meeting warned of higher financial-stability risks, technology companies’ borrowing and excessive future-profit expectations. Leveraged funds could amplify bond volatility. Counterweights were European banks’ strong capital, liquidity and profitability and lower technology-financing concentration than in the US. This was a risk scenario, not a report of actual insolvency.
The University of Michigan’s preliminary 9 October survey showed US consumer sentiment falling from September’s 48.1 to 46.3. Current conditions fell from 50.9 to 44.7, but expectations rose from 46.3 to 47.3. The university highlighted expensive goods and borrowing that made large purchases harder. Median expected inflation for the coming year rose from 4.6% to 4.7%.
The survey measures attitudes, not actual spending or a central-bank forecast. The median is the middle response: half expect no higher inflation and half no lower inflation; October’s figures are preliminary.
On 9 October, Destatis reported 2,373 German business insolvency cases in July, 8.0% more than a year earlier. From January to July, transport and storage recorded 85.5 cases per 10,000 businesses, versus 42.8 across the economy. However, creditors’ claims over those seven months fell from 31.8 to 21.9 billion euros: more economically significant businesses had failed a year earlier.
It counts cases registered by courts per 10,000 businesses, not the default probability of one bond. Cases enter the statistics after the first court decision, often after about three months; creditors’ claims are not realised losses, and businesses closing for other reasons are excluded.
9–13 October: fuel, interest-rate and technology costs persisted
On 9 October, the US Treasury’s Office of Foreign Assets Control issued General License 135. Under its 9 October terms and the specified US rules, the licence authorised transactions involving the sale, delivery, offloading and import of Russian-origin diesel, including US imports, until 7 April 2027 at 00:01 Eastern Daylight Time (EDT). Those terms did not permit debits from accounts of Russia’s central bank, National Wealth Fund or Finance Ministry at US financial institutions. They did not remove all sanctions: the licence neither changed other countries’ rules nor set a delivery volume or schedule.
On 11 October, the International Energy Agency identified renewed attacks on Saudi civilian and energy infrastructure and asked countries to consider an additional diesel-stock release. No new quantity had been agreed. On 7 October, countries had already agreed to accelerate the uncompleted remainder of March’s stock programme, prioritising diesel; that was an earlier commitment, not an additional quantity.
On 12 October, Cleveland Federal Reserve President Beth Hammack said demand-restraining interest rates were still needed to bring inflation down. She highlighted energy, tariff-related import costs and demand for artificial-intelligence equipment that was raising the price of components used elsewhere. This was her personal assessment, not a Federal Reserve decision.
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The Bank of Japan’s preliminary September Corporate Goods Price Index, published on 13 October, showed annual growth of 6.8% after August’s 7.6%, and a 0.3% monthly decline. Import prices fell 0.2% from August in yen but rose 1.0% in contract currencies. Petroleum, coal and natural gas became 2.3% more expensive in contract currencies and contributed 0.69 percentage point to overall import-price growth.
The producer index measures goods traded between businesses, not consumer prices or all production costs. Converting imports into yen changes the comparison; annual and monthly changes have different bases, and preliminary figures may be revised.
On 12 October, chip designer NVIDIA and networking supplier Cisco presented a plan for denser optical connections. Against 200-gigabit-per-second-per-lane modules, their design envisages four times the bandwidth density and about 1.3 times the energy efficiency. NVIDIA also contributed some rack and computing-module designs to the open-standards community. Processor designer AMD presented the open Helion rack design for AI agents that execute tasks; it planned November 2026 availability for equipment still being developed with partners.
A gigabit is one billion bits. The vendors’ comparison describes particular connections, not a whole data centre’s electricity bill or profit; an open design and planned availability are not realised sales revenue.
The European Central Bank’s 12 October reference rate was 1.1181 US dollars per euro, after 1.1206 on 9 October. The euro weakened by about 0.22% between those reference points. The rate was published before Beth Hammack’s speech, so this comparison neither establishes a reaction to her remarks nor represents a transaction price.
13 October: a better growth forecast and higher energy costs
On 13 October, the International Monetary Fund raised its 2026 global real-growth forecast from July’s 3.0% to 3.1%. Its 3.4% assessment for next year was unchanged. This is projected economic activity, not an achieved full-year result or an investment return. Technology investment supports demand, while energy-importing countries face higher costs.
That day, Germany’s statistical office confirmed September annual consumer-price inflation of 3.3%, after August’s 2.9%. Growth excluding food and energy remained 2.4%, while energy prices were 14.9% higher than a year earlier. The fuel-tax reduction from 1 October was not yet reflected in September’s measurement. These are German figures, not a reading for the entire euro area.
On 13 October, US bank JPMorganChase reported 6% higher third-quarter net profit. Net interest income rose 13% and operating expenses 12%, while provisions for credit losses fell from roughly 3.4 to 2.7 billion US dollars. One bank does not describe the entire sector: profit depends on expenses and provision estimates as well as demand for loans.
14 October: consumer prices rose while equipment sales grew
On 14 October, the US Bureau of Labor Statistics reported that annual consumer-price inflation rose from August’s 3.4% to 3.7% in September, and from 2.4% to 2.6% excluding food and energy. Petrol prices rose 9.1% over the month and accounted for more than half of the overall 0.6% monthly increase. These were September prices, reported in October.
Preliminary figures released the same day showed average hourly earnings for US private non-farm employees rising 0.1% in September, but their purchasing power falling 0.5% after price changes. A larger number on a payslip therefore did not necessarily buy more.
On 14 October, the International Energy Agency estimated September world oil supply at 102.3 million barrels a day. That was 2.5 million, or about 2.5%, more than in August. The agency also described continuing diesel shortages: more crude oil does not yet mean fuel reaches consumers when needed.
Chipmaking-equipment supplier ASML reported third-quarter revenue of 11.66 billion euros on 14 October, about 55% more than a year earlier. Net profit of 4.96 billion euros included an approximately 0.51 billion-euro gain from an increase in the value of an investment. Not all profit growth therefore came from equipment sales.
Asia’s decline was severe, but the US did not repeat it
On 15 October, South Korea’s main share index, the KOSPI, closed down 7.57%. Japan’s Nikkei 225 lost 4.90% and Taiwan’s TAIEX fell 3.41%. This was not a single-company problem: several markets important to the technology industry came under pressure together.
In South Korea, the fall reached the threshold for a temporary halt across the KOSPI market. At 12:38 Korean time on 15 October, the Korea Exchange announced a 20-minute suspension of KOSPI market trading. This was a pause triggered by a sharp price decline, not an all-day exchange closure or a restriction limited to certain automated orders.
The sequence matters. The US Nasdaq Composite technology-heavy share index had fallen 1.88% on 14 October, before pressure reached Asia the following day. At their 15 October meeting, South Korean financial authorities identified US interest-rate expectations, uncertainty over the profitability of artificial-intelligence investment and oil prices as risks. That is the authorities’ explanation, not proof that every sale had the same cause.
The subsequent US session on 15 October was different: the S&P 500 gained 0.33% and the Nasdaq Composite rose 0.08%. On 16 October, Japan’s Nikkei 225 closed 1.39% higher and Taiwan’s TAIEX gained 0.30%. Japan’s index nevertheless remained 3.57% below its 14 October close. A modest rebound is not the same as recovering the full loss.
US sales rose, but not simply because people bought more
On 15 October, the US published September retail and food-service sales. Their value rose 0.8% from August, but only 0.2% excluding petrol stations. Petrol-station sales increased 6.4%. These figures measure dollars spent, not quantities purchased: higher fuel prices can lift the value of sales without an increase in the amount bought.
Figures released the same day showed that prices received by US producers increased 1.3% in September from August and 6.3% from a year earlier. The statistical agency attributed more than four fifths of the monthly rise in goods prices to energy. This is not a forecast of shop prices: a business can pass higher expenses to customers or absorb some of them through lower profit.
These releases came after the Asian sessions described above had ended, so they could not have caused the earlier falls that day. They add to the broader problem: when fuel and other essential bills take more money, less remains for discretionary purchases.
TSMC’s sales outlook provides a counterweight to technology fears
Taiwan’s TSMC, which manufactures chips for other companies, reported third-quarter revenue of US$46.72 billion on 15 October. On 15 October, it forecast US$52.3–54.3 billion for the fourth quarter. The midpoint implies roughly 14.1% growth from the third quarter, but this remains guidance rather than revenue already earned.
The company reiterated its US$60–64 billion investment plan for 2026. Strong chip demand supports manufacturers and equipment suppliers, but does not establish that buying more equipment will pay off for every data centre. Revenue at the start of the supply chain is not the same as profit at its end.
European industry has yet to show a broad recovery
Eurostat reported on 15 October that euro-area industrial production fell 0.5% in August from July and 1.1% from August a year earlier. However, the production of capital goods, such as equipment, increased 0.4% over the month. This is an important exception: weaker industry overall does not prevent growth in individual areas of investment.
15–16 October: US bond yields fell while production grew
On 15 October, the indicative annual yield on 10-year US Treasuries was 5.10%, compared with 5.19% on 14 October.
On 16 October, the Federal Reserve reported a 0.7% monthly increase in US real industrial production in September, with manufacturing up 0.3%. Both changes are seasonally adjusted. These figures cover a later month than the euro-area August statistics discussed earlier, so they are not a like-for-like comparison of the same period across countries.
19–20 October: the US rebound was followed by Korean losses
On 20 October, South Korea’s main KOSPI index closed at 5,552.74 points, down 3.73% on the day. The KOSDAQ index fell 3.33% to 781.97 points. In its daily review compiled at 09:45 Lithuanian time, the exchange linked the KOSPI decline to concerns about artificial-intelligence profitability and financing, and the international situation. This is the exchange’s market interpretation, not proof that every seller had the same motive.
On 19 October, the US Nasdaq Composite equity index rose 1.11%, while the Nasdaq-100 index of large non-financial companies gained 1.17%. The PHLX Semiconductor index advanced 1.61%. These are results from the previous US trading day, not changes during the 20 October US session.
Chinese production grew much faster than consumer sales
On 19 October, China’s statistics office reported that real gross domestic product in the third quarter was 4.5% higher than a year earlier. Growth had been 4.3% in the second quarter. In September, value added by industrial enterprises meeting the specified size threshold increased 5.5% year on year, but retail sales grew only 1.1%. Industrial value added is adjusted for price changes, whereas sales are reported at current prices; these are not identically calculated measures of volume.
Property exposed another weak part of domestic demand: investment in property development over January–September was 20.6% lower than a year earlier. This is a change in investment over nine months, not a September house-price decline. A shortage of construction orders can directly reduce revenues for suppliers of building materials and equipment.
On 20 October, China’s one-year loan prime rate was set at 3.0%, and the rate for loans over five years at 3.5%. These are reference rates used in bank loan pricing. An individual borrower’s interest rate also depends on the contract and the bank’s risk assessment, so neither figure is a loan price available equally to everyone.
Petrol pushed Canada’s headline price measure higher
On 19 October, Statistics Canada reported that annual inflation in September had accelerated from 3.0% to 3.1%. Excluding petrol, however, price growth slowed from 2.4% to 2.2%. Petrol cost 27.8% more than a year earlier, compared with annual growth of 22.8% in August. The higher headline inflation rate therefore does not indicate uniformly stronger pressure across all prices.
? Annual inflation: which prices are being compared?
This compares a consumer price basket with the same month a year earlier, not with the previous month. The measure excluding petrol helps separate its influence but is not the same as a measure excluding all energy products.
21 October: Korea’s price surge triggered a pause in programmatic buying
At 04:51:56 Lithuanian time on 21 October, South Korea’s exchange KRX suspended the validity of programmatic buy orders for five minutes. Its notice recorded a KOSPI 200 index futures price of 904.84 points, a base of 859.90 points and an exchange-reported increase of 5.22%. The mechanism was triggered after the price remained at least 5% higher for at least one minute.
? Programmatic order pause: what actually stopped?
This exchange mechanism briefly suspends programmatic buy orders in the share market when futures prices rise unusually quickly. It is not a halt to all trading. The futures price change is also not the return of the KOSPI share index itself.
US session results on 20 October were mixed: the broad S&P 500 equity index rose 0.28%, the thirty-company Dow Jones Industrial Average gained 1.02%, and the Nasdaq Composite fell 0.02%. These are price-index changes from the 19 October close, not fund returns measured in euros. The differences alone do not show how much money investors moved between sectors.
The US Treasury’s indicative 10-year bond yield fell from 5.15% to 5.12% on 20 October, while the 2-year yield rose from 4.77% to 4.79%. Different maturities therefore moved in opposite directions even within the same country’s bond market.
? Bond yield: how should this figure be read?
These are daily points on the US Treasury’s estimated nominal yield curve, based on indicative quotations. They are not the Federal Reserve’s policy rate or a bond fund’s return. Other things equal, rising market yields reduce the prices of existing fixed-rate bonds.
German industry faces higher energy costs and a more cautious outlook
On 20 October, Germany’s statistical office Destatis reported that industrial producer prices in September were 6.7% higher than a year earlier. Energy prices rose 14.9%, while prices excluding energy increased 3.2%. Cost pressure is therefore uneven: energy-intensive production faces the largest burden.
? Producer prices: what do they measure?
The index covers industrial goods produced and sold within Germany, excluding value added tax. It is not consumer inflation: retail prices also reflect distribution and transport costs and sellers’ margins.
Also on 20 October, the German economic research institute ZEW reported that its financial experts’ expectations indicator fell from 34.7 points in September to 28.1 in October. However, their assessment of the current situation improved from −47.1 to −35.9 points. The distinction matters: respondents are less negative about the present but more cautious about the next six months.
? ZEW expectations: how should the indicator be read?
The share of financial experts expecting conditions to deteriorate is subtracted from the share expecting improvement. A positive reading means optimists outnumber pessimists, not that the economy is growing by that percentage.
Japan’s export value rose much faster than the quantity shipped
On 21 October, Japan Customs reported that September export value in yen was 16.7% higher than a year earlier, while the export volume index rose just 1.9%. A much larger sales total therefore does not mean an equally strong increase in overseas demand. These are preliminary September figures, not October trade results.
The import gap was wider: value in yen increased 18.9%, even though the volume index fell 1.6%. Greater trade turnover therefore does not necessarily show a stronger economy.
? Trade value and volume: what is the difference?
Value is measured in yen; the volume index helps separate price effects. The gap is not pure inflation: currency movements and the mix of goods also matter. All changes compare September 2026 with September 2025.
Netflix’s profitability improved, but its advertising outlook weakened
On 20 October, video-streaming company Netflix reported third-quarter revenue of $12.874 billion, up 11.8% from a year earlier. Its operating margin increased from 28.2% to 34.6%. However, operating profit exceeded the company’s own forecast mainly because of expense timing, so the whole improvement should not be treated as permanent.
Netflix also cut its 2026 advertising revenue forecast from approximately $3 billion to $2.7 billion. The new expectation is about 10% below the previous one because advertising product capabilities are being rolled out more slowly than expected. This is a forecast reduction, not a 10% decline in advertising revenue already earned.
? Operating margin: what does 34.6% show?
Operating profit divided by revenue: this quarter, $100 of revenue produced $34.60 of operating profit. This is neither net profit nor cash paid to shareholders. Expense timing can affect an individual quarter’s result.
Quarter
What matters now
A rebound does not remove shared technology and interest-rate risks
Korean equity funds and broader Asian funds may recover together if investors raise their valuations of the same semiconductor and electronics companies. That offers an opportunity after a decline, but different country labels do not guarantee independent sources of revenue. If both funds hold many of the same technology suppliers, one reduction in orders can affect both investments. The exchange pause also illustrates a practical limit: during unusually fast moves, an order may not execute at the time or price expected.
Lower yields were a favourable price factor for longer-dated US bonds, but shorter-term yields did not support the same conclusion. For a euro-based investor, a change in the dollar can amplify or offset the result of both bonds and US shares. One session’s gains are therefore insufficient evidence that financing is becoming cheaper for every company.
Chinese demand depends on who the customer is
Suppliers of industrial equipment to China may be in a different position from sellers of consumer goods or construction materials. The former depend on factory orders, while the latter need household purchases and new building activity. Someone assessing a Chinese equity fund or a European exporter should therefore ask which customers generate revenue, rather than rely only on the country’s headline economic growth rate.
More expensive fuel changes household spending and bond risks
For Canadian transport companies, petrol and other fuel prices matter through costs; for retailers, they matter through the money customers have left for discretionary purchases. Higher selling prices can help energy companies, but production, refining and financing costs still shape their profits. The overall consumer price index does not establish the profitability of each of these businesses.
For Canadian government bonds, the question is whether the central bank regards the petrol surge as temporary or sees it spreading to other prices. Expectations of higher interest rates for longer would put pressure on long-dated fixed-rate bond prices. Weaker demand would be a counterweight. For holdings without a currency hedge, changes in the Canadian dollar also affect the return measured in euros.
The US–Iran memorandum of 18 June does not lower a transport company’s or European manufacturer’s fuel costs unless dependable deliveries resume. Nor does a higher selling price guarantee more profit for an energy producer if volumes fall or operating costs rise.
Industrial profits depend on the ability to pass costs to customers
For German chemical and other energy-intensive companies’ shares, the question is whether selling prices can cover higher costs. Contracts allowing price adjustments can protect part of their profit. Weak demand limits that opportunity: customers may reduce orders or choose another supplier. Upcoming results should therefore distinguish revenue growth driven by prices from an increase in the quantity sold.
Long-dated, fixed-rate euro bonds face a different risk. Persistent price pressure could make investors demand higher yields, reducing the prices of existing bonds. The counterweight would be weaker consumption and investment restraining inflation. Shorter-dated bonds generally show smaller price changes when interest-rate expectations shift.
Exporters’ revenue and importers’ costs can move differently
Higher sales value can support Japanese exporters’ shares if companies preserve their profits. Modest volume growth nevertheless cautions against treating the entire revenue increase as a surge in orders. Japanese retailers and other businesses reliant on imported goods face a different exposure: if they cannot pass higher costs on to customers, their share of sales retained as profit falls.
The opportunity lies in businesses growing both volume and profit. The risk is an attractive revenue figure driven mainly by higher prices or currency translation. A Japanese equity fund’s return in euros also depends on the yen; these statistics do not measure that portfolio effect.
Strong current profit does not validate every growth expectation
Both sides matter for Netflix shares and communication-services funds holding the company. Current profitability gives it greater capacity to fund content and service development. A lower advertising outlook nevertheless weakens one argument for future growth that may underpin the price investors pay for its shares.
For a broader basket of digital-advertising companies, this is not evidence of an industry-wide demand decline: Netflix identified its own product rollout pace. The opportunity would be delayed capabilities reaching customers and revenue catching up. The risk is a prolonged delay alongside expenses returning in later quarters.
Quarter
What comes next
Korea’s session close on 21 October will show whether the buying wave lasted through the day. The final share-index result should be distinguished from the morning’s futures price surge.
The US Federal Reserve meeting on 27–28 October will help clarify how the central bank balances price pressure and growth. For bonds, its explanation of future interest rates matters alongside the decision itself.
At the cutoff, the United Kingdom’s September consumer-price data scheduled for 21 October, 09:00 Lithuanian time were still due. For sterling and UK bond investors, the question is whether price pressure remains widespread or is concentrated in particular product groups.
29 October: the European Central Bank will announce its monetary-policy decision. The key question is how it assesses the transmission of higher energy costs to other prices alongside the effect of weak demand.
29–30 October: Bank of Japan meeting. Its economic and price outlook is scheduled for 30 October. Does the bank see domestic demand strong enough for more expensive imports to feed broader price growth, rather than simply squeezing company profits?
Fourth quarter of 2026, ending 31 December. Netflix forecasts a 26.0% operating margin. The next test is whether advertising product rollout accelerates while returning expenses remain consistent with that forecast. The quarter-end is not the results publication date.
On 28 October, the Bank of Canada will announce its interest-rate decision and an updated economic assessment. The main question is whether slowing price growth elsewhere will outweigh more expensive petrol.
On 10 November, Taiwanese chipmaker TSMC will release October sales. The result for the first month of the quarter will help test progress towards the fourth-quarter revenue guidance announced on 15 October.
Important. This is general market analysis, not a personal recommendation to buy or sell. Historical data and company results do not guarantee future returns. Forecasts and conditional scenarios may not materialise.
How is the history preserved and updated?
All five periods in this edition share one information date. Week means the latest 7 days, quarter means 90 days, and year means the trailing 12 months. The next dated edition will have a separate URL. This text keeps its date and assessment; later events are not silently inserted into an older edition. Longer periods assess new evidence alongside earlier developments without repeating every headline.
