Global stock markets turned sharply lower on Thursday, October 22, 2026, as rising geopolitical risk, expensive oil and a spending cut at Tesla combined to unsettle investors. S&P 500 futures were down more than 1% before the New York open, while Nasdaq futures fell nearly 1.8%, pointing to a difficult start for U.S. technology shares. Asian and European indices also traded mostly in negative territory.

Middle East tension pushes oil higher

Energy markets sat at the centre of the anxiety. Reports pointed to fresh drone attacks by Iran-backed Houthi forces on Saudi airports and the Shaybah oil field operated by Saudi Aramco, while Washington reportedly ordered its embassy staff in Riyadh to leave. Iran also continued to target vessels trying to pass through the Strait of Hormuz, one of the most important oil shipping routes in the world. Adding to the unease, reports suggested the United States and Israel may restart major combat operations against Iran after the American midterm elections. As a result, Brent crude climbed to about $112 per barrel.

Asia takes the hardest hit

Asian economies, which import most of their fuel, felt the pressure first. South Korea’s KOSPI dropped 3.52%, and Japan’s Nikkei 225 slid 2.65%. China’s CSI 300 lost 1.84% and is now down roughly 15% for the year, which places it in correction territory. India’s Nifty 50 held up comparatively better but still eased 0.82%. The Wall Street Journal also reported that oil from Iran’s “shadow fleet” heading to China has finally run out after the long blockade, which tightens supply for the world’s largest crude importer.

Europe and bond markets also feel the strain

European stocks followed Asia lower. The Stoxx 600 fell 0.92% in early trading, while the UK’s FTSE 100 declined 0.46% before lunch. In bond markets, France’s 10-year yield rose to 5.1%, its highest level since 2002. This suggests traders still doubt that the country has moved past its fiscal troubles.

Tesla trims spending while SpaceX surprises

Company news added another layer of pressure. Tesla shares fell about 5.35% in after-hours trading after the company cut its 2026 capital expenditure guidance from $25 billion to $20 billion following its third-quarter earnings call. Deutsche Bank’s Jim Reid said the decision raised questions about how fast Tesla is moving into AI and robotics, even though current revenue and profit were close to expectations.

In contrast, SpaceX stock had risen 8% a day earlier after a strong earnings report. Its first-quarter 2027 revenue guidance of $33 billion to $37 billion came in roughly 57% above analyst estimates, according to Stifel. Elon Musk also pointed to a long-term revenue ambition far above what Wall Street currently models.

AI spending remains the market’s big bet

The wider backdrop is the enormous investment in artificial intelligence. Morgan Stanley estimates that AI-related capital spending could reach $1.6 trillion in 2027 and drive about a quarter of S&P 500 sales growth next year, with Nvidia as the largest beneficiary. Because so much market optimism rests on this spending, any sign of slowdown from a major player can quickly shake sentiment.

What to watch next

Investors will track oil prices and Hormuz shipping developments, Asian market stability, French bond yields and how U.S. technology stocks react once trading begins. Risk appetite also weakened in crypto, with Bitcoin slipping to around $81,922.