European stock markets edged higher in Monday’s trading (October 26), recouping some of the previous week’s losses as crude oil prices corrected by approximately 1%. The decline in energy prices followed diplomatic efforts to ease tensions in the Middle East, though investors remained cautious ahead of earnings reports from major U.S. technology firms and a series of central bank decisions due this week.
The STOXX 600 index remained relatively stable, following a decline of over 1% the previous week. Germany’s DAX rose 0.4%, France’s CAC 40 gained 0.6%, and Italy’s FTSE MIB added 0.5%. Meanwhile, the UK’s FTSE 100 slipped 0.1%, pressured by declines in shares of BP and Shell ahead of their respective earnings reports.
The correction in oil prices provided some relief to European markets, which are highly sensitive to energy costs. Brent crude had surged 6.2% last week—marking its highest weekly close since mid-2022—after Houthi drone and missile attacks on Saudi Arabian energy and transport infrastructure fueled supply concerns.
Despite the dip in oil prices, inflationary pressures stemming from persistently high energy costs remain a concern. Markets anticipate that the Federal Reserve will hold interest rates steady in the 3.75%–4.00% range this week, though the probability of a 25-basis-point hike in December remains around 80%. The European Central Bank and the Bank of Japan are also expected to keep rates unchanged for now, before considering further tightening.
Investors are also awaiting earnings reports from Alphabet, Microsoft, and Amazon to gauge the sustainability of investments in artificial intelligence, following a sell-off in tech stocks last week driven by concerns over high capital expenditures. In France, sentiment improved slightly after Moody’s opted not to downgrade the country’s sovereign debt rating, although political instability and government bond yields—which had briefly breached 5%—continue to pose risks to the market.