Global Markets — Brazil Falls 24%, Chips Crack on Friday, Europe and Health Care Hold

1 · This Week's Action

The global view. The ex-US world index closed the week at 80.57, down 0.16% — a fourth weekly close under 82.85, and a second week on the summer-low support near 80.3. The path: Monday 80.86, Tuesday 81.47, Wednesday 81.93, Thursday 81.90, Friday 80.57, with an intraday low of 80.06. The index sits 6.8% under its September 4 record of 86.41 and 10.7% above its spring low of 72.75.

The all-world index fell 0.37% to 155.33, a second week under the range it held from August, 156.82 to 162.39. The S&P 500 fund fell 0.56% to 755.72, 3.0% under its October 6 record; the Nasdaq 100 fund fell 1.97% to 690.49, 9.1% under its own. Most of it came on Friday, when the all-world index fell 1.7% in one session.

America still leads the year — by less. The S&P 500 fund is +10.8% for 2026, the all-world index +10.1%, the world ex-US +9.5%. A week ago America led the world ex-US by 1.7 points; this week by 1.3. The house cointegration monitor still lists the VEU/SPY pair as breaking, the spread 1.8 standard deviations below its mean, from 2.2.

The week, in one line: investors raised cash — but region by region, not everywhere at once. On Monday the money left Brazil. On Friday it left the chips, and with them Korea and Taiwan. In between, Europe rose, India rose, health care rose in three of four regions, and the US ten-year yield closed the week under 5 percent for the first time since the peak. Nineteen of thirty-five regional funds rose. The best-to-worst spread was 27.4 points — from 11.2 a week ago, and almost all of it was one country.

Brazil: the runoff, and the unwind. Lula won Brazil's runoff on Sunday, 52 to 48. A Tokyo-listed Bovespa fund fell nearly 15% in Asian trade before Brazil opened. On Monday the Brazil fund EWZ fell 19.8%; the Latin America 40 fund fell 11.2%. By Friday EWZ was down 23.8% on the week at 32.46, and ILF down 14.8% at 32.13. In local terms the Bovespa fell 18.1% on the week and the real lost about 8.5% against the dollar. The fund had risen into the runoff — its record close of the year, 43.54, came on 9 October, after the first round. One week took back all of it and more.

The shock stayed in Brazil. Mexico fell 1.0%, the emerging-markets fund 1.6%, Argentina 9.1%. Indonesia fell 6.0% for its own reasons. A shock that stays inside one country is a repricing of that country. One that spreads is a problem for the asset class. This one, so far, did not spread.

The chips: up three days, down one. The chip index rose from 10,779 to 11,684 on Wednesday, on SK hynix's record quarter and a Kospi that rose 6.6% through 6,000 on the same day. Thursday turned on the US mega-cap reports: Alphabet fell about 13% and ServiceNow about 27% in the day after their numbers. On Friday, after Intel's 30% fall on its outlook, the chip index fell 7.2% in one session to 10,689 — a week that ended 0.8% lower after being 8.4% higher. The chip majors fund SMH ended at 522.49, 21.9% under its June record.

Asia took the Friday leg. Korea: the Kospi closed the week +3.3% at 5,731, but the dollar fund EWY fell 5.5% on Friday alone, from a week-high close of 165.91. Taiwan: the fund EWT −3.6% to 101.11, 14.3% under its October 5 record; the Taiex −1.8%. Japan: the Nikkei +1.0% to 63,290, the TOPIX flat, the dollar fund −1.3% — the Bank of Japan held at 1.25% on Thursday and more than doubled the pace of its ETF sales. Hong Kong +0.9%, China's large caps +2.4%, the A-shares −2.3%. India: the Nifty +2.0% to 23,053, the Sensex +1.8%, the dollar fund +2.7%.

The regional board — nineteen green of thirty-five. The top: Hong Kong +3.64%, India +2.71%, China large caps +2.38%, Germany +2.30%, Norway +2.17%, France +2.10%, Switzerland +2.09%, Austria +2.09%, Australia +1.44%, Korea +1.08%. The bottom: Brazil −23.78%, Argentina −9.07%, Indonesia −6.04%, Taiwan −3.61%, Thailand −3.40%, emerging markets (VWO) −2.34%, the A-shares −2.28%, Spain −2.02%.

The cross-asset backdrop — the bonds held, everything that glitters fell. Three green of twelve: the belly +0.78%, the long bond +0.61% to 81.84, the dollar +0.14%. The red: silver −8.46% — to its lowest close of 2026, 44.60 — the bitcoin fund −5.66%, gold −2.95% to 355.78 — its lowest close of the past year — the Nasdaq top-30 fund −2.39%, the Nasdaq 100 −1.97%, copper miners −1.55%, the US top-20 fund −0.87%, the S&P −0.56% and oil −0.41%. Oil gave back a little of last week's high; the Brent fund rose 0.56% to 71.39, a new record close. The volatility index closed at 19.42, after a week that ran from 16.21 to 23.93.

The tech ETFs — five of twenty-one green, and software at the bottom. Last week's leaders became this week's losers: cloud (CLOU) −7.56%, software (IGV) −5.70%, digital transformation −5.60%, the internet fund −5.31%, cybersecurity −4.80%, the AI fund AIQ −3.45%. The green was small and physical: defence technology +3.05%, uranium and nuclear +1.52%, the internet of things +1.26%, the smart grid +1.12%, data centres +0.55%. The chip funds ended almost flat on the week — XSD −0.36%, the fabless fund −0.78%, SMH −0.89% — because Monday to Wednesday paid for Friday.

The global sectors — nine of eleven green, health care first. Health care +2.98% to 112.66 — above last week's one-year closing high of 110.35 — utilities +1.43%, industrials +1.41%, real estate +1.11%, discretionary +0.79%, staples +0.64%, energy +0.49% to 64.19, a record close of the year, financials +0.40%, materials +0.40%. The red: communication −4.13% and technology −1.66%. The world index itself fell 0.37%. Nine sectors up and the index down is what it looks like when the two biggest sectors carry the weight.

Was the sector week global, or one region carrying it? Health care rose in America (+3.1%), Europe (+4.7%) and developed Asia (+0.7%) and slipped 0.4% in the emerging markets. Technology: America −2.0%, Europe +0.9%, developed Asia −1.7%, emerging markets −1.7% — a third week running that Europe's software-heavy tech beat Asia's chip-heavy tech. Communication services: America −5.3%, Europe +3.1% — the widest US-minus-Europe spread in the matrix, −8.4 points, the sector where Alphabet and Meta sit.

The Global Compass

Regions: developed over emerging, a third week. VEA +0.56% against VWO −2.34%. The emerging basket carries Brazil, Taiwan and the A-shares, three of the week's losers. The developed basket carries Germany, Switzerland and Australia, three of its winners.

Sectors: defensives over cyclicals in three of four regions, a fourth week. The engine's cyclical-minus-defensive spread was −1.6 points in the US, −0.9 in Europe, −0.4 in developed Asia and +1.0 in the emerging markets. On the month the US spread is −12.0 points. On the year it has turned negative, −3.1 points, from +4.6 a week ago. For 2026 as a whole, America's defensive sectors are now ahead of its cyclical ones.

Sectors: the leaders' bench. Technology 134.69, 11.9% under its October 6 record. Industrials 187.11, 9.5% under August. Financials 129.19, 5.7% under the September 3 record, an eighth week under the 134.55 line. Materials 106.46, a tenth week under the February line.

Stay home vs go global — the US view. This week the world beat America, by a little: VEU −0.16%, VT −0.37%, SPY −0.56%. On the year: +10.8% for America against +10.1% for the world and +9.5% for the world ex-US.

Stay home vs go global — the Europe view: everyone up but Spain. In local terms: the STOXX 600 +1.73% to 646.75, the DAX +2.53% to 25,818, the CAC +2.52% to 7,979, the Euro Stoxx 50 +1.04% to 6,131 — and outside the euro the FTSE 100 +0.37% to 10,730 and Switzerland's SMI +2.35% to 14,802, a record close. Spain's IBEX fell 1.77%. The dollar-listed Europe fund rose 1.50%, the euro-hedged one 1.03%; the euro slipped 0.3% to 1.1169. The French fund rose 2.10% to 42.24, 2.4% above the low of the year it made on 12 October.

Europe split — the core came back, the periphery paused. Germany +2.3%, France +2.1%, Switzerland +2.1%, Austria +2.1% and Norway +2.2%, against Spain −2.0% and Poland −0.2%. The Netherlands, Europe's chip-equipment market, rose 0.9% despite Friday. Last week Germany and France fell with the core. This week they led the bounce — and both are still below where they started 2026.

Stay home vs go global — the Asia view: the week split on Friday. Korea: EWY +1.08%, the Kospi +3.3%, the Kosdaq −3.6%. Taiwan: EWT −3.61%, the Taiex −1.8%. Japan: the Nikkei +1.0%, the TOPIX flat, the dollar fund −1.26% — the yen weakened from 156.74 to 157.52 per dollar. China and Hong Kong +1 to +4%, the A-shares −2.3%. India: the dollar fund +2.71%. Australia +1.44%. The markets that own the AI hardware rose into Wednesday and fell on Friday. The markets that own almost none rose all week.

Stay tech vs go broad — broad won, everywhere. The equal-weight S&P +0.82% against the S&P's −0.56% and the Nasdaq 100's −1.97%; the world −0.37% against global tech's −1.66%. Small caps rose 1.30%. On the year tech still leads by far: global tech +28.3% against the world's +10.1%.

Momentum vs defensive — min-vol at a record, again. International min-vol rose 0.29% to 96.25, a record close; global min-vol rose 0.35% to 129.42. International momentum rose 0.55% to 50.96. On the year min-vol leads, +11.6% against +6.2%. Value and growth were level on the week, +0.53% against +0.68%; on the year value leads +11.0% against +4.1%.

The Closelook letters — where this one sits. The house thesis, compressed: the stock market is a growing system at the aggregate level in which most constituents slowly fade while a small group massively outperforms — and that group changes; it never stays static. Own the aggregate, know the current winner group, watch for the rotation. Last week a new candidate for the winner group stepped forward — the software that runs on the chips. This week it was sold with everything else, and the market's money went to the places it goes when it wants to wait: health care, staples, Switzerland, the bonds. This letter reads the map; Sunday's US letter reads the tape and the AI indices' patterns; Sunday evening's Hypergrowth letter reads the names.