European Midday Briefing: Stocks Rise as Oil Falls on Diplomacy Hopes

MARKET WRAPS

Stocks:

After opening lower Monday--following a strong week for the continent--European shares were edging higher encouraged by lower oil prices.

Oil dropped more than 3.5% as renewed diplomatic efforts to end the conflict between the U.S. and Iran eased concerns over Middle East oil supplies.

Investors continue to grapple with mounting doubts around AI, Deutsche Bank's Jim Reid said, and AI stocks will be back in focus when tech giant Apple reports earnings after the closing bell Monday.

Meanwhile, as the continent will enters the coming winter with natural-gas storage below the nine-year average, the U.S. is backing a quick resumption of Russian natural-gas sales to Europe via pipes running through Ukraine.

Stocks to Watch

Novartis shares have done well lately, and investors might be overlooking risks, Deutsche Bank said as it cut its recommendation on the stock to sell from hold and trimmed its target price.

Berenberg said NatWest Group's share price drop was overdone, and that the stock looked cheap.

Barclays also said NatWest's trading at an around 20% discount to European peers was hard to justify, as the bank still had sector-leading fundamentals and especially as the U.K.'s bank tax will now be lower than feared.

U.S. Markets:

Stock futures were edging higher as investors to make a cautious return to risk after last week's tech selloff.

The week ahead will be shaped by midterm elections.

Investors will watch final-stage polls closely, with a Democratic sweep of the House and Senate viewed as negative for the AI trade amid voter concern around data centers.

Forex:

The euro was stronger against the dollar after reaching a 17-month low against the greenback last week.

The euro's recent broad weakness could persist after credit ratings agency Fitch revised its outlook on France to negative on Friday, Danske Bank said of the announcement that came came outside the usual rating calendar.

The dollar edged lower as investors exercised caution ahead of Tuesday's midterm elections.

Prediction markets see a Democratic sweep as the most likely outcome, Danske Bank said.

"We would expect a Democratic sweep to have a modestly positive impact on broad dollar, while a divided Congress would likely lead to a very limited market reaction."

Bonds:

Eurozone government bond yields rose at open, with French OATs little changed despite the lowering of the outlook on its credit rating by Fitch Ratings.

In an out-of-schedule review, Fitch Ratings affirmed France's A+ rating but lowered the outlook to negative, reflecting what it called a deterioration since its August review, citing weaker growth, higher borrowing costs and a wider deficit.

The risk-reward of being tactically long in European government bonds has increased--even as risks toward higher energy prices remain, RBC Capital Markets said.

"One could envisage a tactical bond market rally from here in both a scenario where energy surges higher (say on a geopolitical escalation) or starts falling again (in a de-escalation)."

RBC Capital Markets has been bond bearish for quite some time now and doesn't think that the structural backdrop behind the current yield levels has changed.

"Tactically, however, we think the market might well correct further, and it remains to be seen how resilient economic activity in the face of elevated rate-hike expectations and bond yields remain going forward."

The U.S. Treasury is expected to leave coupon auction sizes unchanged at its upcoming quarterly refunding announcement, SanJac Alpha said, adding that everyone is more interested in what Treasury does with buybacks.

J.P. Morgan sees the risk skewed toward cutting longer-term auction sizes in the Treasury's November refunding announcement,though it added that it saw no valid reason to take this action.

Energy:

Oil prices dropped more than 3.5% ahead of the U.S. midterm elections as diplomatic discussions involving Qatari mediators over a potential deal to reopen Hormuz eased the risk premium.

However, concerns over a possible resumption of U.S. military strikes on Iran remained elevated.

"The price action in oil in recent weeks reflects a market increasingly bracing for the potential for more hostilities between the U.S. and Iran," ING said.

"Given that many of the key developments in this conflict have unfolded over weekends, the market may have to hold its breath until the end of the week."

Metals:

Gold futures ticked higher, but held below $4,000 a troy ounce after slumping last week.

"Gold fell to its lowest level in a year at the end of last week as oil prices surged amid inflation concerns and expectations that interest rates could stay higher for longer [...], with the selloff in technology shares adding to pressure as investors reduced positions to cover losses elsewhere," ING said.

EMEA HEADLINES

Ryanair Looks to Cut Costs to Counter Higher Fuel Bill

Ryanair Holdings expects a significantly higher fuel bill for its next fiscal year and is looking at potential cost cuts to soften the blow, warning that hiking prices and pulling routes won't be enough.

The conflict in the Middle East has pushed up fuel costs for airlines around the world, prompting carriers to raise fares and trim routes at a time when many customers are holding off on booking tickets until the last minute due to economic uncertainty.

Alstom Shares Plunge After Technical Issues Prompt Guidance Cut

Shares in Alstom plunged after the French train maker cut guidance due to technical and production issues with some products, including Coradia Max high-capacity regional trains.

In the first half of the fiscal year that ends in March, Alstom said technical issues related to the Coradia Max surfaced, delaying production of the platform in the first quarter.

Saudi Arabia's Economy Shrinks 3.8% as Oil Output Falls

Saudi Arabia's gross domestic product shrank 3.8% on year in the third quarter as the Arab region's largest economy struggled to contain the fallout from the Iran war-even before the latest escalations with Yemen's Houthi militants.

The General Authority for Statistics said Sunday that real GDP in the last quarter was weighed down by a 20.4% decline in oil activities compared with the same period in 2025.

Serbia's Gen Z Students Toppled a Strongman. Now Comes the Hard Part.

BELGRADE, Serbia-Serbia's Gen Z student movement pulled off what the country's opposition parties couldn't in 14 years: ousting one of Europe's most entrenched populist and authoritarian leaders.

But after sweeping last month's parliamentary election, with around 53% of the vote, and ending Aleksandar Vučić's grip on power, now comes the hard part. Can a movement built to resist power govern?

GLOBAL NEWS

BOE Expected to Join Peers in Raising Key Rate

The Bank of England is expected to join its peers in raising borrowing costs Thursday as it attempts to contain a pickup in inflation ahead of an intense period of wage negotiations, but may signal that it does not intend to move as aggressively as some investors anticipate.

The Federal Reserve, the European Central Bank and the Bank of Japan have each raised their key interest rates at least once since the start of the war between the U.S. and Iran, which has raised energy prices.

Asia's Factory Activity Buoyed by AI Demand, but Cracks Emerge

Factory-activity gauges across Asian economies were mixed-as strong demand for artificial-intelligence hardware continued to support, while shipping bottlenecks and higher energy costs linked to the Middle East conflict weighed on growth.

Purchasing managers' index data released by S&P Global on Monday showed that Southeast Asian manufacturers saw new orders rise, export powerhouses Taiwan, Japan South Korea faced slower growth after months of strong growth.

How Rep. Haley Stevens Turned Against a Fellow Democrat-and Became a Party Pariah

DETROIT-Rep. Haley Stevens's journey from team player to pariah showcases some of the Democratic Party's deepest divisions and the potential for politics to deliver the unexpected.

Stevens stunned Democrats on Sunday when she withdrew her endorsement for her Democratic primary opponent, Abdul El-Sayed, and threw her backing behind Republican Mike Rogers in Michigan's U.S. Senate race.

Panic and Anger Spread as Europe's Great Pension Covenant Unravels

PARIS-For decades, Europeans have been happy to surrender around half of their pay to the state. In exchange, they could expect to retire in their 60s on a relatively comfortable, state-funded pension.

No longer. Stretched public finances and a rapidly aging population are threatening this covenant, stoking fear and anger across the continent over the future of a cradle-to-grave welfare state voters had long taken for granted.

Nine Killed in Florida Jet Crash

A business jet crashed in Florida on Sunday, killing all nine people on board, authorities said.

Transportation Secretary Sean Duffy said the people were killed when a Learjet 60 crashed near Cresthaven, Fla., at around 12:50 p.m. local time. The plane departed from Austin, Texas, and was heading to North Eleuthera Airport in the Bahamas, the Federal Aviation Administration said.

Democratic Infighting Flares as Election Accelerates Battle for Party's Future

Democrats have a chance to retake the Senate-a proposition that seemed far-fetched earlier this year. But instead of unifying ahead of Election Day, the party is already engaged in infighting and finger-pointing.

(MORE TO FOLLOW) Dow Jones Newswires

November 02, 2026 05:17 ET (10:17 GMT)

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