European stocks and the euro fell on Monday as unrest in France added to concerns about the country’s fiscal outlook, while Wall Street futures rebounded from last week’s tech-led selloff ahead of ?a big ?week of earnings from AI heavyweights.
Europe’s STOXX 600 fell 0.7 per cent by 4:37 a.m. ET, while the French blue-chip CAC 40 index dropped over 1 per cent as protests highlighted the government’s struggle to rein in its large budget deficit.
The euro fell 0.3 per cent to US$1.1203, near last week’s 16-month low of US$1.1113, as the US dollar index rose 0.2 per cent to 101.9.
A fall in oil prices following President Donald ?Trump’s decision to waive some sanctions on Russia offered some support to broader markets, ?though investors remained focused on whether massive spending on artificial intelligence will pay off.
“Investors will want to hear more than another ambitious spending plan: they will want evidence that AI is helping generate enough revenue and profit to justify the bill,” said Ipek Ozkardeskaya, senior analyst at Swissquote.
Wall Street looked set for a firmer open. Nasdaq futures rose 1.1 per cent and S&P 500 futures gained 0.6 per cent after a bruising week in ?which the Philadelphia ?Semiconductor Index tumbled 11.4 per cent in its longest ?losing streak since 2008.
Investors will be hoping Meta will beat forecasts when it announces earnings on Wednesday, alongside semiconductor firms ?Lam Research and Texas Instruments and Tesla. Results from SpaceX are due Tuesday.
Meta ?is one of five AI hyperscalers that combined are expected to increase their capital spending to about US$1.2 trillion ?next year, according to Goldman Sachs.
Overall US earnings are still expected to rise about 30 per cent, largely driven by the technology sector.
Trump said ?a final decision on the Russia sanctions waiver had not been made, while Secretary of State Marco Rubio said the president would take up to 60 days to assess the impact of such a move.
Meanwhile, Iran reported another tanker had hit a mine in the Strait of Hormuz, leaving investors weighing whether higher energy costs could feed through to inflation and growth.
“Until the situation becomes clearer, inflationary pressures will continue to mount, ?keeping central bankers under pressure and weighing on growth prospects,” economists at CIC Market Solutions said in a note.
Geopolitical risks in the Middle East kept investors cautious, helping extend a rally in U.S. bonds, with 10-year Treasury yields down 2.5 basis points (bps) at 5.07 per cent , having just recorded their largest weekly fall in more than eight months.
In Europe, however, concerns over France’s fiscal outlook kept pressure on sovereign debt. France’s 10-year yield was up 7.3 bps at 4.857 per cent, while safer German 10-year yields rose 1.6 bps ?to 3.425 per cent.
Oil prices remained under pressure, with Brent futures falling 1.8 per cent to US$104 ?a barrel after hitting their highest level in five months on Friday. US crude lost 1.9 per cent to US$99.4 a barrel.
Earlier ?in Asia, shares were mixed. Japan’s Nikkei fell 0.6 per cent. South Korea’s gained around 1.8 per cent, while Taiwan’s fell 0.6 per cent. MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.01 per cent.
Chinese blue ?chips edged up 0.1 per cent after data showed the economy expanded 4.5 per cent in the third quarter, slightly above forecasts. Retail sales also topped expectations ?with a 1.1 per cent rise in September, while industrial output growth matched forecasts at 5.5 per cent.
China’s yuan firmed to its strongest level against the US dollar since June 2022 at 6.6815.
Jakarta’s equity benchmark fell 3.6 per cent to fresh lows, reeling from index provider MSCI saying it was considering shifting Indonesia to “standalone” status from its current “emerging markets” classification.
Elsewhere, gold gained 0.3 per cent ?to US$4,183 an ounce as lower bond yields boosted demand for non-yielding assets, while bitcoin rose 2.1 per cent to trade back above US$82,000.
Reuters
