European Midday Briefing: Stocks Recover; Oil Falls Ahead of Central Bank Decision

MARKET WRAPS

European stocks were largely gaining on Monday and starting the trading week on a positive note after last week's declines.

Industrial and healthcare stocks strengthened across the continent, lifting the pan-European Stoxx 600 index.

The FTSE 100, the DAX and the CAC 40 were each in positive territory approaching midday, as oil prices fell from recent highs.

Despite the gains, shares in Brazil-exposed European companies fell after incumbent Luiz Inacio Lula da Silva won against right-wing contender Flavio Bolsonaro in Sunday's presidential election.

The moves come ahead of a heavy week of corporate earnings and as investors await interest-rate decisions by the European Central Bank as well as by the Federal Reserve.

The ECB on Thursday is widely expected to leave the deposit rate unchanged, as the region's economic outlook remains uncertain.

LBBW said it doesn't think that the ECB interest-rate decision and the comments by President Christine Lagarde will significantly alter investors' assessment of future interest rate trends.

The ECB's announcement will be followed by provisional eurozone gross domestic product data for the third quarter plus provisional October inflation data from France and Germany, on Friday.

The German GfK consumer confidence survey for October is expected on Wednesday and eurozone business and consumer surveys are set for Thursday.

Elsewhere, U.K. Treasury Chief John Healey will present his country's budget on Wednesday and data on British consumer lending for September are due on Thursday.

Economic Insight

The ECB would prefer not to talk about France at its upcoming monetary policy meeting but may find it impossible to avoid, according to Citi. It added that volatility in French government bonds will likely dominate bank president Christine Lagarde's press conference on Thursday.

"With France impossible to avoid, the ECB will likely remind of the (conditional) backstops but offer little encouragement for intervention."

Sentiment among German businesses rose for a sixth straight month in October, suggesting a tentative economic recovery was holding in the country despite the high energy prices and rising borrowing costs.

Forex:

The euro was steady but the currency could struggle to recover as concerns about France's debt persist despite Moody's maintaining the country's Aa3 rating on Friday, ING said.

"While welcome news in the short term, we will need to see concrete and material progress on the French budget over the coming months to take pressure off the euro."

Sterling fell against the dollar and the euro on investor jitters ahead of the U.K. budget on Wednesday. The country's treasury chief is expected to give extra support to the state's business lender and infrastructure bank, according to the Financial Times.

"This would mark a substantial increase in cash borrowing relative to our baseline expectations," Deutsche Bank said.

The dollar was flat against a basket of currencies as investors looked ahead to the Fed decision on Wednesday. With a hold nearly fully priced, the foreign exchange reaction hinges on tone, Monex Europe said.

Bonds:

French government bonds outperformed their eurozone peers in opening trade after Moody's Ratings left France's credit rating unchanged at Aa3, on the assumption that France adopts a deficit-reducing budget for 2027.

Intermediate German government bond yields remain attractive for long-term investors who can tolerate near-term volatility, J.P. Morgan said. It sticks with its cautious stance on intra-eurozone government bond yield spreads due to weakening sentiment on France, elevated developed-market rate volatility, and geopolitical and energy uncertainty.

Yields on U.K. government bonds edged lower as investors await Westminster's budget statement. Markets expect the country to stick to the fiscal rules, easing pressure on gilt yields.

"We don't expect any fiscal related term premia-driven steepening of the two-year and ten-year gilt yield curve following the budget delivery," J.P. Morgan said.

Treasury yields turned higher in European trade, tracking rises in most eurozone peers.

Money markets were assigning a 90% probability for interest rates to stay unchanged.

Energy:

Oil prices pulled back from recent highs Monday but held above $100 a barrel as traders weighed diplomatic efforts to ease U.S.-Iran tensions against persistent regional supply risks and fresh Houthi strikes on Saudi Arabia.

Natural Gas

Natural-gas prices climbed above 97 euros a megawatt-hour for the first time since late 2022, as colder weather threatened to lift demand across the continent while the Iran war continues to disrupt global supplies.

Metals:

Gold futures ticked higher in early European trading, supported by softer oil prices and as investors awaited the Fed's policy decision.

"A pullback in oil prices in early trade is helping to limit some inflation pass-through expectations though energy futures still remain elevated. The next major catalyst for gold markets will be the FOMC decision this week and whether the Fed shifts its tone to more overtly hawkish," MUFG said.

EMEA HEADLINES

This German Energy Giant Is an Overlooked AI Bargain

Gas turbine maker GE Vernova is one of artificial intelligence's clear stock-market winners. Even after the recent AI-themed selloff, its shares are up 25% year to date. But Siemens Energy, its nearly identical German competitor, is down 1.4% this year and trades at a forward-earnings multiple about 40% lower. The gap is hard to justify.

GE Vernova and Siemens Energy have much in common. Both were once a part of giant conglomerates whose names they still bear. They are the world's two largest gas turbine manufacturers by firm orders since 2016, each having booked about 150 gigawatts through the first half of 2026, according to BloombergNEF. They sell electrification equipment, which is in high demand, and each has a wind business with a turbulent past. They even generate a similar amount of revenue.

Santander Shares Drop After Surprise Result in Brazilian Election

Banco Santander shares fell after a surprise victory for leftist candidate President Luiz Inacio Lula da Silva over right-wing contender Flavio Bolsonaro in Sunday's presidential election.

Shares in Santander were down 5.3% at 10.90 euros during early European trading on Monday.

Saudi Arabia's Sabic Profit Rises Despite Lower Sales Volume

Saudi Basic Industries Corp. reported an increase in third-quarter net profit, buoyed by higher average selling prices and gains from investments, even as regional shipping disruptions weighed on sales volumes.

Sabic, one of the world's largest petrochemical manufacturers, said Sunday that net profit rose to 499 million Saudi riyals ($133 million) from 434 million riyals in the same period a year earlier. Revenue fell to 28.17 billion riyals from 29.08 billion riyals.

Bayer Gets in China Its First Global Approval for Stroke Prevention Drug

Bayer said it received regulatory authorization to launch a new drug to prevent recurrent stroke in China, winning the first global approval for a new class of medicines.

The German pharmaceutical group said the decision from China's National Medical Products Administration hands it the first approval worldwide for a class of drugs called Factor XIa inhibitors, which aim to slow down the activity of a protein that regulates how the body forms clots without increasing the risk of bleeding.

GLOBAL NEWS

Oil Prices Fall as Traders Weigh U.S.-Iran Diplomacy, Saudi Attacks

Oil prices fell Monday, pulling back from recent highs as traders weighed diplomatic efforts to ease U.S.-Iran hostilities against renewed Houthi attacks on Saudi Arabia and persistent Middle East supply risks.

December Brent crude futures fell 1.8% to $114.57 a barrel, while December West Texas Intermediate futures dropped 2.2% to $100.96 a barrel.

Brazil's Surprise Election Outcome Set to Batter Stocks, Real

Brazil's presidential election result is poised to hammer financial markets, with currency futures and exchange-traded funds tracking local stocks both tumbling in Asian trading.

Leftist candidate President Luiz Inácio Lula da Silva managed to clinch an upset victory over right-wing contender Flávio Bolsonaro on Sunday with over 99% of votes counted, according to local authorities.

Two AI Chipmakers Make Up 34% of America's Earnings Boom

Wall Street has rested much of its optimism about the stock market on a surge in corporate earnings. The catch is that the profit growth is being driven by a handful of AI giants.

Analysts expect companies in the S&P 500 to report a 30% jump in third-quarter earnings from a year ago, according to FactSet, boosting investor confidence that the good times can keep rolling so long as businesses keep printing money. But just two companies-Nvidia and Micron-account for 34% of that growth, according to a Dow Jones Market Data analysis.

France's Nuclear Forces Bring In Neighbors to Keep Russia in Check

PARIS-France, working with European allies, is strengthening and expanding its role as a nuclear-weapons power in an effort to bolster deterrence against Russian attacks as Europe's confidence in American security guarantees wavers.

Dubbed "forward deterrence" by President Emmanuel Macron, the plan envisions deployments of French nuclear-enabled Rafale jet fighters across Europe and the creation of new infrastructure, communications, early-warning and intelligence-sharing links with these allies.

Le Pen Pitches Herself as France's Unifier After Another Weekend of Protests

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October 26, 2026 07:15 ET (11:15 GMT)