European shares rise as earnings and US inflation data take focus

what happened

Reuters reports that European shares moved higher on Monday while US equity futures were broadly flat. Investors looked beyond the rise in oil prices and turned their attention to the opening of earnings season and important US inflation figures. Crude trading stayed volatile after US President Donald Trump said Ukraine and Russia had reached an energy-related truce and suggested expanding Russian diesel shipments. The proposal lacked clear details, while strikes affecting Gulf shipping and airports highlighted continuing threats to energy supplies.

Brent, after an initial decline, climbed to roughly a two-week peak and was last 1.3% higher at $106 a barrel. US crude futures advanced by more than 1% as well. Still, investors showed little appetite for large bearish positions after recent turmoil driven by bonds. Euro zone government debt was mostly stable, while Treasuries were unavailable because of the Columbus Day holiday. Marco Vailati, head of research and investment at Cassa Lombarda, said there was no deterioration in the situation and that profit expectations were supporting sentiment despite persistent inflation and energy-price concerns.

By 1129 GMT, the pan-European STOXX 600 had gained 0.6%, led in part by banks (.SX7P). S&P 500 futures rose 0.05%, while Nasdaq contracts declined 0.15%. Asian trading was uneven: MSCI’s broad Asia-Pacific share gauge excluding Japan (.MISX00000PUS) lost 0.5%, Chinese blue chips fell 0.7%, South Korean stocks dropped 3.6% and Taiwan’s TWSE:TAIEX was little changed. JPMorgan and Goldman Sachs are scheduled to begin the Wall Street reporting season on Tuesday, followed by Bank of America on Wednesday. TSMC 2330.TW, the largest producer of advanced AI chips globally, is expected to post a sixth straight quarter of record earnings on Thursday, while ASML reports on Wednesday. LSEG IBES projects a gain of more than 30% in third-quarter S&P 500 earnings, driven mainly by technology, and a 21% increase for STOXX companies, or 9.7% excluding energy.

Treasury yields reached 24-year highs this month as elevated energy costs raised the prospect of persistent inflation, a hawkish policy stance and pressure on equity valuations. On Monday, benchmark Bund yields edged down and the risk spreads on French and Italian debt narrowed slightly. Markets now await US consumer and producer-price data and retail sales. Higher energy costs are expected to push CPI up 0.6% to an annual 3.7%, while core inflation is forecast at 0.2% monthly and 2.5% annually. Bruce Kasman, JPMorgan’s head of global economics, said the inflation signals pointed to a sharp acceleration in the headline rate that would squeeze purchasing power, alongside firmer core inflation that would keep central banks focused on near-term hikes. Markets price a 19% chance of a Federal Reserve increase this month and a probability above 80% in December; investors are also positioning for rate increases in the EU, Japan and Britain before year-end. The euro slipped 0.2% to $1.1175 after five consecutive weekly declines linked to concerns about France’s fiscal position ahead of the 2027 presidential election. The dollar index stayed near a 17-month high, up about 0.2% at 102.42, while the US currency was slightly stronger against the yen at 158.6 in holiday-thinned Japanese trading. Gold fell 0.5% to $4,170 an ounce after rising more than 1% last week.

why it matters

Markets are balancing expected support from corporate earnings against the risk that expensive energy will revive inflation. Bank and technology results, together with US data, may therefore alter interest-rate expectations.

instruments