European stocks gain as oil retreats ahead of US CPI and earnings

what happened

European shares and US index futures edged higher on Monday after a volatile Asian session. Reuters reported that oil prices retreated after US President Donald Trump announced an energy-related ceasefire between Ukraine and Russia and proposed that Moscow raise diesel exports. The details remained unclear, however, and the initiative faced political opposition in Washington.

Brent fell 0.3% to $104.37 a barrel after initially rising in Asia; it had recently reached $109.97. US crude futures lost 0.6% to $91.33. The STOXX 600 was up 0.6% at 0742 GMT, while S&P 500 and Nasdaq futures gained about 0.3%. European automakers advanced after China and the European Union reached agreements on hybrid vehicle exports.

Trading was subdued because Japan was closed for a holiday and the US Treasury market was shut for Columbus Day. JPMorgan and Goldman Sachs are due to report on Tuesday, followed by Bank of America on Wednesday; TSMC earnings are expected on Thursday and ASML results on Wednesday. Investors are also awaiting US consumer and producer prices and retail sales. CPI is expected to rise 0.6% on the month and reach 3.7% annually, while core inflation is forecast at 0.2% and 2.5%, respectively.

why it matters

Cheaper oil is providing temporary support for equities, but stronger inflation could reinforce expectations of tighter central-bank policy. Markets imply an 18% chance of a Federal Reserve rate increase this month and an 85% chance in December; investors are also pricing hikes in the EU, Japan and Britain before year-end.

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