What moved
- US (Monday's close): The S&P 500 ended 2.35% higher at 7,549.94, the Nasdaq Composite gained 2.74% to 25,253.14 and the Dow rose 2.15% to 52,389.75. The S&P is still 3.76% below its 52-week high. Overnight, S&P 500 futures are trading 0.17% higher and Nasdaq 100 futures are 0.18% lower, so the American lead has stalled.
- Europe (Monday's close): The DAX closed 1.73% higher, the Euro Stoxx 50 rose 1.94%, the CAC 40 gained 1.16% and the FTSE 100 added 1.02% to 10,782.87.
- Asia (today): Kospi led the region, closing 4.39% higher. The Nikkei 225 finished up 2.87% at 60,459.58 and Taiwan closed 2.52% higher. Chinese markets lagged: the Hang Seng is trading 0.37% higher and the Shanghai Composite is roughly flat (+0.08%).
Why
Two things drove Monday's rally: chip stocks bounced back, and oil fell. Last week's sell-off was driven by fears that the Democrats' sweep of Congress would slow spending on AI data centres. Those fears eased, and buyers returned to semiconductors. AMD jumped after an Oppenheimer upgrade and Broadcom also rallied strongly. The leadership was unusual: Nvidia fell after its board opened an investigation into chief executive Jensen Huang. The market treated that as a problem for one company, not for the AI trade as a whole.
The second driver was oil. President Trump said military action against Iran was not needed 'at this point' and that he would hold off on new strikes, though he is keeping the naval blockade in the Strait of Hormuz in place. Brent has fallen again this morning, down 1.24% at $91.42, and is now 27.5% below its 52-week high. Cheaper fuel lowers costs for companies and eases pressure on inflation, which helps explain why airlines, industrials and miners rallied alongside the chipmakers. The de-escalation is not settled: Iran is still attacking ships near Hormuz, and US and Gulf officials doubt a deal is close.
Asia picked up both themes, which is why the chip-heavy markets in Seoul, Tokyo and Taipei outpaced China. In Seoul, the Korea Exchange briefly restricted buy orders as the Kospi surged. The Nikkei is still down 2.78% over five sessions, so this is a partial recovery, not a new advance.
Sentiment & risk appetite
Fear eased sharply on Monday. The VIX, Wall Street's gauge of expected volatility, fell 22.31% to 19.92, and the MOVE index of bond-market volatility dropped 7.31% to 85.98. The US rally was broad: on PrimerIQ's count across our listed universe, 4,677 US stocks rose against 1,434 that fell. Industrials (+3.82%) and technology (+3.73%) led, while energy (+0.52%) and consumer staples (+0.90%) trailed, a pattern that points to genuine appetite for risk rather than a cautious rotation. Breadth was thinner outside the US: our advance-decline ratio was 1.97 in the UK and 1.04 in Asia. Investors were not abandoning safer assets either. Gold is 0.29% higher at $4,126.40, and the US 10-year yield closed little changed at 4.864% (+0.5bp).
Economic calendar
The day's main event is US consumer price inflation for October, due at 13:30 GMT. Economists expect prices to have risen 0.3% in the month, after September's 0.6%, with core inflation (excluding food and energy) up 0.2%, down from 0.3%. There will be no reliable annual rate, because last year's government shutdown disrupted the October 2025 data collection. With oil having retreated, a soft core reading would support Monday's rally. A hot one would test it, because interest-rate expectations would shift and higher yields weigh most on the growth stocks that led the bounce.
The next big UK release, the ONS labour-market figures, is not due until 17 November. The latest reading put unemployment at 4.7% for June to August.
Earnings
Vodafone reported first-half results this morning. It raised its full-year guidance for adjusted EBITDAaL (its main operating-profit measure) and for adjusted free cash flow, and said service-revenue growth picked up to 6.4% in the second quarter. The shares have not yet traded on the news; the guidance increase is the line to watch at the open. No other major results had landed by publication.