The Weekend: Markets tank as AI bubble fears grow, while Musk celebrates record pay day

Guy Fawkes effigies weren't the only things going up in smoke this week. A massive sell-off led by technology stocks amid growing fears of an AI bubble sent the FTSE (^FTSE) and other major equities markets crashing to some of their worst weekly losses in months.

More than US$1 trillion was knocked off the value of a handful of the biggest AI-related stocks, including Facebook parent Meta (META) and chip giant Nvidia (NVDA). Microsoft (MSFT) has fallen almost 9% in the last eight trading days and is on track for its longest streak of daily losses in more than a decade.

The increasing sense of panic about the valuations of Silicon Valley's big shots as they splash out unfathomable sums of money on AI infrastructure was largely to blame for the rout, but signs of weakness in the US economy didn't help.

As if to underline the extravagant spending causing investors sleepless nights, Tesla boss Elon Musk was finally awarded his record-breaking US$1 trillion pay package, contingent on hitting a series of ambitious targets. After months of debate, shareholders at the electric-car giant's AGM on Thursday voted in favour by 75%, prompting a victorious Musk to declare "I super appreciate it".

Meanwhile, this side of the pond, the Bank of England's latest interest rates decision came right down to the wire. In the end, inflation fears won out, with the committee voting five to four in favour of holding the rate steady at 4%.

Finally, as leaves turn to russet and winter coats are retrieved from the back of wardrobes, is it time to breathe new life into your clothing collection? Take a look at these sartorial tips for the new season, courtesy of stylist Nicky Hambleton-Jones: Freshen your autumn wardrobe.

Key moments from last weekBritons are set to pay more for Christmas this year, with festive shopping baskets costing up to 8% more than in 2024.·SOPA Images via Getty Images

Bank of England holds interest rates at 4% in knife-edge decision

It was always going to be a close call. In the end, a 5-4 majority saw the central bank break its cycle of cutting borrowing costs by a quarter of a percentage point at every other rate-setting meeting since the summer of 2024.

The market is putting a roughly two-thirds probability on a quarter-point rate cut coming next month, little changed from before this week's decision, according to levels implied by the swaps market.

Governor Andrew Bailey said: “We still think rates are on a gradual path downwards, but we need to be sure that inflation is on track to return to our 2% target before we cut them again.”

Here's what Elon Musk needs to do to earn his Tesla trillion

The world's richest person could become a lot richer after Tesla (TSLA) shareholders gave the nod to his hugely contentious and record-breaking US$1 trillion pay package. The eye-watering stock award, to be doled out in tranches if Musk hits a series of ambitious growth targets, would seal his grip on the electric-vehicle maker by increasing his stake to about 25%.

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To cheers from the audience at Tesla's Texas factory, Musk pumped his fists in the air triumphantly before outlining his vision of a future shaped by the "limitless" potential of AI and robotics.

But meeting the targets tied to all that money will be no mean feat, even to a man of Musk's undoubted talents.

Most popular stocks and funds investors bought in October

An easing of US-China trade tensions and strong company earnings boosted markets in October, though talk of a stock market bubble centred around AI ramped up as the latest earnings season kicked off.

These worries appeared to still be front of mind for investors when the Magnificent 7 reported their quarterly earnings at the end of the month, as shares in Meta (META) and Microsoft (MSFT) fell following the release of their results. Both companies flagged even higher spending around AI.

The month was capped by a reduction in US interest rates and a breakthrough in the trade war between Washington and Beijing. We took a look at how all of this influenced investors' choices during a busy month.

Regulator extends consultation deadline for car finance scandal

The Financial Conduct Authority (FCA) announced this week that it would be extending the consultation deadline until 12 December, adding that it still expects to publish final rules in either February or March.

The car financing scandal involved the mis-selling of financing agreements to customers. It is estimated that 44% of all agreements made since 2007 would be considered unfair, allowing those affected to claim compensation.

The FCA has said that those who were owed money could expect to receive an average of £700 per agreement.

Why rising inflation will dampen Christmas cheer for many families

Britons are set to pay more for Christmas this year, with festive shopping baskets costing up to 8% more than in 2024, according to the latest data from the Office for National Statistics and the British Retail Consortium.

Beyond the economic data, the practical reality for many low-income households is one of cutting back or going without entirely.

Paul Dales, chief UK economist at Capital Economics, told Yahoo Finance UK: “This year is not going to be a merry one when it comes to the cost of a traditional Christmas dinner. Food inflation hit 4.5% in September and is forecast to accelerate to 5.5% by December.”

On money and personal financePoor customer service can ruin the experience of a hotel guest.·Jacob Wackerhausen via Getty Images

We've all had a holiday marred by disappointing accommodation. Whether it's a cleanliness issue, a less-than-satisfactory breakfast offering or simply unhelpful staff, it can really put a dampener on things. Equally, a good hospitality experience that surpasses your expectations can help elevate your trip to an unforgettable experience. Which?'s annual survey might help you make the right choice: Best and worst UK hotel chains revealed

Integrating technology into a home can enhance its functionality, security and comfort while saving time and energy. Automated systems allow everything from heating and lighting to speakers and alarms to be controlled remotely – for example you can switch lights and music on, turn radiators off and monitor callers from wherever you are, providing peace of mind. Get a head start by choosing a property incorporating the latest tech: 9 high-tech homes that make daily life easier

Find more personal finance gems here

The Week Ahead

Economic data: Thursday is the big day for the UK, with the release of third-quarter GDP figures. Analysts see a slight slowdown from the 1.4% annual growth rate seen in Q2. Construction orders and manufacturing output will also be in the spotlight.

Before that, all eyes will be on Tuesday's headline joblessness figure for the three months to September. The consensus forecast is for a small rise in the unemployment rate to 4.9% from 4.8%.

Company earnings: A raft of big-name companies are due to report in the coming week, ranging across sectors from entertainment to tech and fashion.

Chinese tech giant Tencent (0700.HK) is slated to release its latest quarterly results, having reported a strong second quarter, buoyed by its investments in AI and solid performance in gaming.

In the US, media and entertainment company Disney (DIS) is set to release full-year results, with the company having reported declines in revenue and operating income in its linear TV arm in the third quarter.

Meanwhile, expectations are high going into Cisco's (CSCO) latest results, following a rating upgrade on the technology company's stock by UBS (UBSG.SW).

In the UK, investors will be keeping an eye on Burberry's (BRBY.L) results, for further signs of recovery from the luxury fashion brand.

Aerospace engineer Rolls-Royce (RR.L) has been a stand-out performer on the FTSE 100 (^FTSE) this year, as investors flocked to defence stocks. Investors will want to see if the company has sustained that momentum in the third quarter, when the company reports on Thursday.

Find out more here.

End note: Carr crowned king of the traitors

It's been a phenomenal success and the TV event of the year. I'm talking of course about The Celebrity Traitors, which culminated on Thursday night in a nail-biting emotional roller-coaster of a finale. After weeks of deception, back-stabbing and some of the most misjudged theories in the game's short history, comedian Alan Carr broke down as he scooped the prize for his chosen charity. By his own admission, he was an unlikely winner, coming into the show with "no poker face", as he succinctly put it.

Our entertainment team took a deep dive into the ways Carr managed to evade detection right up to the very end: How Alan Carr won The Celebrity Traitors

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