European stocks edged higher on Monday as oil prices pulled back from six-month highs, offering some relief after a bruising fortnight for risk assets. The FTSE 100 gained around 0.5% to 10,746, while the CAC 40 and DAX rallied roughly 0.8-1%. US futures also pointed higher after consecutive weekly declines for both the S&P 500 and Nasdaq.

Bond markets were calmer too, with the French 10-year OAT yield slipping back below 5% after Moody's refrained from downgrading France. US Treasury yields also remained below 5%, although they have ticked slightly higher since Thursday's sharp risk-off move sent yields tumbling.

Brent crude fell –2% from its six-month peak hit on Friday above $117, back to around $114 this morning. Fears of escalation after the US midterms next week and perhaps around the Israeli elections this week contributed to the drive higher in crude prices. Qatari mediators are reportedly visiting Tehran but Houthi strikes continue to worry markets alongside President Trump's threats to strike Iran again, though he stated Sunday he was weighing up whether to launch fresh strikes or do a deal with Tehran. 

The focus now shifts to a packed week of central bank decisions, major earnings and key economic releases, leaving investors wary about chasing the early bounce.

Petrobras fell about 22%, while brewer Ambev dropped 18% as investors assessed the implications of a government viewed as less market-friendly. Reports that former president Jair Bolsonaro is refusing to concede have also fuelled concerns about political uncertainty.

The sharp reaction highlights how sensitive investors remain to policy risk and fiscal concerns in emerging markets.

Following a strong third quarter, the company now expects FY26 adjusted pre-tax profit of at least £425m, comfortably ahead of consensus expectations near £387m. Its committed order backlog climbed to £12.6bn from £9.3bn, underlining continued momentum in enterprise technology spending.

The update lands ahead of a pivotal earnings week in London, with Shell, BP, HSBC, Lloyds, NatWest, Standard Chartered, Unilever, GSK and AstraZeneca all set to report. Investors must also navigate Wednesday's Budget, which could have significant implications for sterling, gilts, defence stocks, REITs, housebuilders and bookmakers.

Nebius, CoreWeave and Iren all fell sharply in premarket trading following Musk's comments that debt markets have "almost entirely shut off access to money" for companies lacking meaningful revenue outside AI data centres.

Musk also suggested SpaceX had closed a $40bn debt deal for GPUs, although Bloomberg later reported that may not be accurate. The remarks nevertheless sharpen concerns over funding conditions across the AI ecosystem.

The issue now comes into focus as Alphabet, Microsoft and Amazon report earnings this week alongside Intel and SanDisk. Investors increasingly want proof that massive AI spending can translate into returns and that debt and equity markets can continue financing the build-out.

Unhealthy rotation: Nasdaq-100 slammed Thursday while the Dow held up. Cue Friday the Nasdaq holds firm, ending flat, and the Dow is smashed up, down –1.2%. These are nasty moves that are taking out positions all over the place and a sign of unhealthy rotation that is. Energy has been the one bright spot but only because of the surge in oil prices that is behind a big part of the problem for stocks. The other big bit of the problem for the market is the retreat in AI risk sentiment, which is largely on funding concerns rather than demand slowing. OpenAI cut its IPO target market cap because of the wobbles. Both it and Anthropic have revealed quarterly earnings to their investors that have been a letdown. Meta has really laid it on thick just how much financing it's going to take. This week will be key.

While inflation remains elevated, investors see little chance of an immediate rate hike, with market-implied odds of a 25bp increase sitting around 10%. Expectations for a December hike remain much higher at roughly 80%.

Alongside the Fed, traders will be watching September Durable Goods Orders, advance Q3 GDP estimates and the Core PCE Price Index, the Fed's preferred inflation gauge. The Atlanta Fed's GDPNow model currently points to 3.5% annualised Q3 growth, helped by a surge in AI-related business investment, with equipment spending running nearly 18% higher.

After the recent volatility in equities, bonds and commodities, this week's combination of central banks, earnings and macro data could set the tone for markets into year-end. Get the full rundown of the week's key events here.