European stocks slip as investors await US midterms and Apple earnings
European equities edged lower on Monday amid cautious sentiment ahead of US midterm elections, Apple’s earnings report and a sharp drop in oil prices, while central banks prepare for policy meetings.
European stock markets slipped modestly on Monday, with the STOXX 600 down 0.10 percent after a tech sell-off on Friday. Investors are focusing on Apple’s upcoming earnings, the outlook for AI-related capital spending and a steep decline in oil prices, which fell about 4.5 percent to $108 per barrel as Iranian negotiators exited talks with Qatari mediators.
The week is seen as pivotal, with market participants digesting recent policy decisions by the Federal Reserve and the European Central Bank, as well as the US midterm elections on Tuesday. Euro-zone government bonds slipped slightly after a rally last week, while sentiment remained fragile amid concerns over France’s fiscal outlook and ongoing street unrest.
"Further expected downside for the euro area PMI is a drag on our Stoxx 600 forecast trajectory," wrote Sebastian Raedler, head of European equity strategy at Bank of America.
"However, the main reason for our caution on European equities is the risk of disappointment in the AI capex cycle as AI models commoditise and competitive moats prove limited," added Raedler.
Barclays’ Emmanuel Cau warned that the debate over whether AI investments can justify their scale may linger, while Goldman Sachs analysts projected hyperscaler capital spending to nearly double to $800 billion this year, rising further to $1.2 trillion by 2027.
"The next phase will be less about identifying who is exposed to AI and more about distinguishing who is already converting that demand into cash," said Kristofer Barrett, head of global equities at Carmignac.
In foreign-exchange markets, major currencies were largely unchanged; the euro rose 0.46 percent to $1.1199, and the dollar edged up 0.16 percent at 157.90 yen. Analysts noted that a renewed tech-driven market sell-off could test the dollar’s safe-haven status.
Central banks slated to meet this week include the Reserve Bank of Australia, the Bank of England and Sweden’s Riksbank, all expected to consider rate hikes, while Norway’s Norges Bank is seen holding rates steady. Upcoming data releases feature the US ISM manufacturing survey for October and the non-farm payrolls report due on Friday.