What moved
US futures are the only live read on Wall Street. S&P 500 futures are up 0.29% at 7,682 and Nasdaq 100 futures up 0.55%. That recovers part of Friday, when the S&P 500 ended 0.52% lower at 7,623.68, the Nasdaq Composite closed down 0.21% and the Dow dropped 1.23% to 52,215.16.
Europe has built on its early gains into the afternoon. The DAX is up 0.91% at 25,410, the CAC 40 up 0.85%, the Euro Stoxx 50 up 0.63% and the FTSE 100 up 0.48% at 10,741. Asia closed mixed and weaker in tech: the Kospi fell 1.46% and the Nikkei lost 0.8%, while the Hang Seng gained 0.51% and Shanghai rose 0.19%.
Why
Oil is the story. Brent is down 5.58% at $110.21 and WTI down 1.99% at $101.22, unwinding much of last week's surge. That rally was driven by Houthi attacks on Saudi energy facilities and reports of possible US and Israeli strikes on Iran. Qatari mediators travelled to Tehran on Sunday, and that hint of diplomacy has taken some of the geopolitical premium out of crude. The supply risk has not gone away, though: the attacks on Saudi facilities continued over the weekend, which is why some analysts call the relief temporary. Cheaper oil helps equities in two ways. It eases the inflation outlook, and with it some pressure on central banks to keep tightening.
That matters more than usual this week. The Fed raised rates in September. It is expected to hold at 3.75–4.00% on Wednesday, but futures put the chance of a December hike at about 84%. Rates are also rising elsewhere: the Bank of Canada and the Reserve Bank of New Zealand are both expected to raise rates on Wednesday.
The tech mood is fragile too. Last Thursday's Nasdaq sell-off came from worries about how to fund the heavy spending on AI. Those doubts carried into Asia's chip stocks today and will be tested when Microsoft and Alphabet report on Wednesday.
Sentiment & risk appetite
Risk appetite has improved this morning but is far from strong. The VIX (expected US stock volatility) is 19.29, slightly lower on the day but up 20% over the month. Friday's selling was broad: our own US count had 3,599 decliners against 2,375 advancers. Energy (XLE +2.6%) and technology (+0.49%) were the only sectors to rise meaningfully, while consumer staples (−1.92%) and communication services (−1.78%) led the declines. Asian tech had a bad session, with a median fall of 2.52% in our universe. Treasuries are steady: the 10-year yield is 4.99%, up 0.2bp, and the 5-year is up 1.2bp. Gold is up 0.62% at $4,032.90, the dollar index is flat at 101.89, and the yen has weakened to 157.28 per dollar.
Economic calendar
Germany's Ifo business climate index rose to 90.2 in October, slightly above the 90.0 expected. Companies were more optimistic about the months ahead, with the expectations gauge up to 91.6 from 90.4, but less happy with conditions now, which fell to 88.8 from 89.5. That improving outlook has helped the DAX. In the US, the only 08:30 ET release was the Chicago Fed's national activity index for September, a second-tier gauge that rarely moves markets. Still to come today are the Dallas Fed manufacturing survey at 10:30 ET and a $69bn two-year Treasury auction at 13:00 ET.
The heavy data comes later in the week. The Fed decides at 14:00 ET on Wednesday, the same day as the UK Budget. US third-quarter GDP and September PCE inflation, the Fed's preferred inflation measure, are due at 08:30 ET on Thursday, alongside the ECB decision. The Bank of Japan decides on Friday.
Earnings
Verizon is the main pre-market report. Adjusted EPS of $1.31 beat the roughly $1.27 expected, it added 406,000 postpaid phone subscribers (its strongest third quarter in five years) and it raised full-year guidance for a third straight quarter. Revenue of $34.31bn fell short of forecasts, however, so the shares have drifted lower before the open.