Global stock markets got the new week off to a positive start on Monday as international crude oil prices pulled back from six-month highs.
At the same time, investors are awaiting a dense slate of technology company earnings this week to gauge the next phase of the artificial intelligence trade.
As of publication, Dow futures were up 0.32%, S&P 500 futures were up 0.14%, and Nasdaq futures were up 0.18%.
Previously, U.S. stocks had fallen sharply for two consecutive weeks, with an index tracking American semiconductor stocks dropping to a three-month low.
In global equities, the MSCI All-Country World Index edged higher on Monday after falling nearly 1% last week.
Europe's Stoxx 600 rose 0.4%, led by sectors sensitive to energy prices such as industrial stocks.
France's CAC 40 jumped 0.9%, with French government bonds also rising, after Europe's second-largest economy successfully avoided a credit rating downgrade.
Brent crude fell 2%, dropping below $115 per barrel.
This followed reports that Iran is preparing to host senior security and defense officials from Saudi Arabia, Pakistan, and Turkey for consultations on regional security issues.
Meanwhile, U.S. President Trump said in an interview with Fox News that regarding whether to reach a deal with Tehran or "solve the problem completely," it is now "time to make a decision."
This week, as Alphabet, Microsoft, and Amazon report earnings, the market will focus on examining these companies' massive spending on AI infrastructure.
In Asia, chipmakers SK Hynix and Samsung Electronics will also report results.
At the same time, the Federal Reserve, European Central Bank, and Bank of Japan will successively announce monetary policy decisions.
Currently, central bank officials are grappling with multiple challenges including stubborn inflation, elevated energy costs, and persistently high global bond yields.
Pepperstone head of research Chris Weston said: "The combination of events facing the market this week is quite severe, including mega-cap tech earnings, AI financing concerns, global semiconductor company results, interest rate meetings from five major central banks, and important inflation and economic growth data that could trigger market volatility."
He noted: "The real danger is not just sharp market swings, but that one event could change how investors interpret the next event, creating a mutually reinforcing feedback loop across stocks, rates, foreign exchange, and market volatility."
Central Bank Super Week Arrives
The market widely expects the Reserve Bank of New Zealand to hike rates on Wednesday.
Meanwhile, investors expect the Federal Reserve to hold rates steady this week, but market-implied probability of a December hike reaches 80%.
The Bank of Japan and European Central Bank face similar expectations, potentially staying put this week while retaining the possibility of a December hike.
A key core inflation indicator due from the U.S. is expected to show price pressures remained elevated in September, with core inflation likely holding at 3.1%.
At the same time, driven by factors including surging data center construction spending, the U.S. economy is expected to grow at a strong annualized pace of 3.2%.
Goldman Sachs analysts said in a report: "The Fed is expected to skip a hike at its October meeting, but will likely implement its second hike of the year in December."
Goldman added: "The most important risk currently is that crude oil futures prices are above our forecast levels, largely reflecting market concerns about potential further conflict with Iran. The more severe and prolonged the energy shock, the more Fed officials worry that inflationary pressures could spread to broader areas of the economy."
Mega-Cap Cloud Earnings to Test AI Investment Boom
On Wall Street, S&P 500 and Nasdaq futures both rose 0.3%.
Beyond the Fed rate decision, Alphabet, Microsoft, and Amazon will report earnings this week, with roughly one-third of S&P 500 constituents expected to release results.
Northern Trust chief investment strategist Gary Paulin said: "All three of the largest hyperscalers will report earnings this week, and I think the messages they deliver will be crucial for the market's next move. We've already seen some fairly sharp pullbacks in related stocks, but that actually helps create a more sustainable market outlook. I think this adjustment period is a fairly healthy correction, because in my view the AI boom is still in its early stages, and we remain in a bull market."
Brazil Election Delivers Surprise Upset
Brazilian President Lula came from behind in the second round of the presidential election to defeat the market-favored Bolsonaro, winning a record fourth presidential term.
As a result, shares of Spanish telecom company Telefonica and Santander Bank fell.
Bloomberg-compiled data shows both companies derive more than 20% of profits from Brazil.
In U.S. premarket trading, U.S.-listed shares of Brazilian companies and other companies with significant Brazil exposure broadly declined.
The iShares MSCI Brazil ETF plunged 27%.
Among other European individual stocks, Portuguese energy company Galp plunged 10%.
This came after the Lisbon-based company said negotiations with Spain's Moeve to integrate their gas station and refining operations in Portugal and Spain ultimately failed to reach an agreement.
Biopharmaceutical company Genmab surged 13% after positive clinical trial results for its ovarian cancer drug.
IT services company Computacenter also rose, as its third-quarter results beat market expectations and it raised its full-year outlook.
French Government Bonds Off to Positive Start
French government bonds rose sharply, with the 10-year yield falling 7 basis points, narrowing the yield spread between French and German bonds of the same maturity.
This followed France not only avoiding a sovereign credit rating downgrade by Moody's, but also seeing no renewed large-scale violence and looting over the weekend.
Moody's maintained France's Aa3 credit rating, seven levels above junk, on par with the UK, but the outlook remains negative.
However, France still has not found an effective way to control its ballooning government debt burden.
This issue has made France the center of bond market anxiety over the past few weeks.
As of last Friday, French government bond yields had risen more than any other developed economy this month, reaching their highest level in 24 years.
Bloomberg MLive strategist Mark Cranfield said: "Compared with last week, French government bond futures have clearly had a much more positive start this week. Moody's decision to maintain France's existing credit rating boosted sentiment. After several weeks of significant widening in the French-German yield spread, investors will next closely watch whether this spread can narrow."
Dollar Strengthens
The U.S. 10-year Treasury yield continued to hold below 5% after a sharp decline over the past two weeks, below the 5.36% high touched earlier this month.
DBS Bank senior rates strategist Eugene Leow said: "Market doubts about the AI outlook, risks of slowing economic growth, European political uncertainty and the U.S. midterm elections all mean safe-haven demand may remain elevated for some time. At current absolute yield levels, U.S. Treasuries should be able to serve as a hedge during risk-averse periods."
In currency markets, the dollar index, which measures the greenback against a basket of major currencies, edged up 0.1%.
The yen weakened, with the dollar rising 0.3% against the yen to trade around 157.28.
Meanwhile, France successfully avoiding a credit rating downgrade last week pushed the euro up 0.1% to $1.1210.
French government bond yields fell 5 basis points to 4.973%, below the high above 5% touched last week.
The pound was roughly flat at $1.3346.
New UK Chancellor John Healey will unveil his first budget on Wednesday.
Currently, rising global borrowing costs and the U.S.-Israel war against Iran keeping energy prices elevated are creating a complex environment for UK fiscal policy.
BTIG Pours Cold Water: Midterms Could Be 'Starting Point for a Decline' Rather Than a Rebound
Wall Street investors hoping for a stock market rally after the November midterm elections may be disappointed.
BTIG strategist Jonathan Krinsky believes that with credit conditions deteriorating and multiple sectors showing signs of fatigue, the risk of a stock market decline is rising.
In a research report, Krinsky said the S&P 500 could pull back to around 7,300 points, near its 200-day moving average and summer lows.
That equates to a decline of about 4.3% from the index's recent level of 7,631 points.
If it breaks below this technical support level, the benchmark index could fall further.
This warning challenges the widespread expectation that stocks will rise after uncertainty over the November 3 election subsides.
Historically, midterm elections have often been turning points for stocks, but Krinsky believes this year's unusually strong market performance makes a repeat less likely.
Krinsky wrote: "The reason stocks tend to perform well in November of midterm election years is that the S&P 500 typically has already weakened before the election. This year, the situation is exactly the opposite."
Goldman Sachs: Retail Trading Down 45% Since Late 2025, Household Buying Remains 'Ballast' for U.S. Stocks, Maintains Year-End S&P 500 Target of 8,000
Goldman Sachs said retail investors have significantly reduced stock trading in recent months, but overall demand for equities from American households remains strong enough to help support the market as selling pressure rises and stock supply increases.
Goldman strategist Ben Snider said in an October 23 research report that retail trading volume has fallen 20% since the summer and 45% since late 2025.
Individual investors recently accounted for about 9% of total U.S. stock trading volume, down from 15% at the end of last year and near the lowest level since 2020.
Meanwhile, after a turbulent week for hedge fund favorites, hedge funds have reduced market exposure.
This divergence of "cooling speculative activity while household investment demand remains strong" is significant for stocks.
Households are the largest holders of U.S. stocks, and their willingness to invest is an important source of support for share prices.
Goldman expects net supply of U.S. public equities to see its largest increase since 2000 in 2027, making continued household buying potentially particularly important.
Stocks in Focus
Telecom company Verizon rose 2% after third-quarter results beat market expectations, while also raising its full-year 2026 earnings guidance.
Several related companies saw share prices decline after Musk posted on X that "200-plus new cloud providers will face guppy-style extinction."
CoreWeave (CRWV) fell 5%, Nebius (NBIS) dropped 3.5%, and Iren (IREN) declined 4%.
Barclays upgraded Tesla to overweight, sending shares up 2%.
The bank's analysts said Tesla has merger opportunities with SpaceX, growth in its robotaxi business, and strong core business fundamentals, making them more optimistic about Tesla's outlook.
Natural gas company Range Resources surged 15%.
EQT announced it will acquire the company, valuing Range Resources at over $50 billion; EQT shares fell 4%.
The all-stock transaction is expected to close in the first quarter of 2027.
Moderna's selloff continued, with shares falling 8%, dragged down by a high-profile cancer vaccine trial data leak on Thursday.
From Thursday to Friday last week, the stock plunged more than 18% cumulatively.
Hyperscaler Meta rose 1%.
The company announced a $35 billion stock offering to raise funds for AI business expansion, while also planning to raise an additional $60 billion through an at-the-market (ATM) equity program.
Retailer Ross Stores jumped more than 6.5% after UBS upgraded it to buy.
The bank's analysts believe continuously improving store operating efficiency could push the stock above $300.
According to a Sunday Financial Times report, Bon Secours Mercy Health is about to acquire healthcare services company Surgery Partners for $6 billion, sending Surgery Partners shares soaring nearly 25%.
Media cited sources saying the take-private deal could be announced as early as Monday, valuing Surgery Partners at $20 per share.
Data analytics company Fair Isaac plunged nearly 10%.
Wells Fargo downgraded it from overweight to neutral.
The downgrade rationale: Fair Isaac announced it will not raise prices to encourage lenders to continue using its FICO credit scoring products.
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