European stocks flat, oil drops as midterm caution prevails

European stock markets exhibited little movement on Monday as investors remained cautious ahead of the US midterm elections. The focus was on Apple's upcoming earnings and hopes for a resolution to the Iran conflict, which helped alleviate some of the market's concerns. The MSCI's main world stocks index remained largely unchanged, while Europe's STOXX 600 index rose by 0.05%.

Tech stocks, including the STOXX Europe 600 Technology, were relatively buoyant, with the index up 0.40%. US equity futures showed gains of 0.76% for Nasdaq and 0.34% for S&P 500. Meanwhile, Japan's Nikkei .N225 fell 0.33%, and South Korea's Kospi added 2.24%, recovering from a 16% drop the previous month. Concerns over France's fiscal situation and ongoing protests were cited as contributing factors to investors' fragile sentiment.

Despite the relatively stable market, Goldman Sachs analysts cautioned that the risk of disappointment in the AI capex cycle could weigh on European equities. They noted that capital spending by hyperscalers was expected to nearly double this year, reaching US$800 billion, and could increase further to US$1.2 trillion by 2027. However, they forecast slower earnings per share growth for the S&P 500 at 18% in 2026, down from nearly 30% in 2026.

The euro strengthened by 0.37% to $1.1199, while the dollar remained relatively stable at 157.72 yen.