Negative opening in Europe (Eurostoxx futures -1.1%, S&P +0% and Nasdaq +0.8%), following a very negative session yesterday on Wall Street. The Dow Jones fell by 3.4%, the S&P 500 by 4.4%, the Nasdaq by 5.5% and the Russell 2000 by 4.5%. The main indices more than erased the gains following Wednesday's elections. The pressure was concentrated on AI-linked stocks, with sharp declines in semiconductors, memory and digital infrastructure companies, although the sell-off extended to other sectors. The movement reflects a widespread shift towards risk aversion, in a context of doubts about capital spending and the pace of AI development. The rise in oil prices also weighed on investor sentiment.
In commodities, oil remains very volatile. Brent is trading around 100 dollars per barrel, after bouncing nearly 4% in the previous session. Despite the recovery, it has accumulated a weekly drop of 15%. The market is weighing the possibility of reaching an agreement to end the war in the Middle East, although differences persist regarding the reopening of the Strait of Hormuz and sanctions on Iran. At the same time, disruptions in Gulf oil product exports and Ukrainian attacks on Russian refineries continue to support prices.
Today’s session will be dominated by the official employment report from the United States, which in October could show a acceleration in non-farm payroll growth (+62,000e vs. +29,000 previous), with the unemployment rate stable at 4.2% and hourly wages growing by 2.9% year-on-year, compared to 3.0% previously. We will also be watching the preliminary reading for October of consumer confidence from the University of Michigan, which could remain depressed due to the high cost of living.
Regarding central banks, yesterday the Bank of England and the Bank of Norway met, both in line with expectations. The BoE raised rates by 25 bp, to 4.0%, in its first hike since the start of the war with Iran. The vote was clearly hawkish (8 to 1), given the energy shock caused by the conflict. The bank expects headline inflation to peak at 4.9% in the second quarter of 2027 and warns that, above 4%, second-round effects increase. It does not expect inflation to return to target until late 2028. Although it does not provide a predefined rate path, the market continues to price in cumulative increases of 75 bp over the next 12 months. Growth forecasts for 2026 and 2027 were also revised upwards, with some moderation expected in 2028.
For its part, the Bank of Norway kept rates at 4.50%, following the 25 bp hike in September. The decision was unanimous and the bank reiterated that it will likely be necessary to keep rates high, without ruling out further increases if needed. The market, on the other hand, is pricing in stability and assumes that rates have already reached the peak of the current cycle.
On the corporate front, we will be watching the results of Amadeus, Logista and IAG.