European Stocks Slip as Oil Prices Fall Before US Midterms

European shares edged lower on Monday, November 2, 2026, as investors assessed global economic uncertainty, upcoming corporate earnings and the US midterm elections. Markets also responded to falling oil prices amid hopes for progress toward ending the war in Iran.

The STOXX 600 declined 0.10%, while technology shares gained 0.30%, according to Reuters. MSCI's main world stock index remained roughly unchanged, reflecting cautious sentiment across international markets.

Brent crude futures dropped 4.5% to approximately $108 per barrel after Iranian negotiators left discussions with Qatari mediators. A draft proposal was circulating, with another meeting potentially scheduled. Trump had recently threatened further attacks against Iran.

US stock futures moved higher during European trading. Nasdaq futures advanced 0.73%, while S&P 500 futures rose 0.42%. The gains followed Friday's sharp losses, when the S&P 500 fell 1.82% and the Nasdaq dropped 2.86%.

Investors face several major developments this week, including the latest policy decisions from the Federal Reserve and European Central Bank, ongoing corporate earnings announcements and Tuesday's US midterm elections.

European government bonds also retreated slightly after a rally the previous week. Sentiment remained fragile because of concerns about France's fiscal outlook and continuing street unrest.

Sebastian Raedler, head of European equity strategy at BofA, identified weaker economic indicators and uncertainty surrounding artificial intelligence investments as significant concerns for European shares.

"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 BofA.

Raedler also highlighted concerns about whether artificial intelligence companies can maintain competitive advantages as their technologies become increasingly commoditized.

"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."

US equities face additional uncertainty from the election outcome. Investors are assessing the possibility of higher corporate taxes and tighter artificial intelligence regulation if Democrats secure control of both chambers of Congress.

Opinion polls indicate that Democrats are favored to win the House of Representatives, while the Senate race remains too close to call. However, the party is expected to remain well short of the two-thirds majority required to override presidential vetoes.

Emmanuel Cau, head of European equity strategy at Barclays, said growing investment commitments and weakening cash flows could prolong questions about the financial returns from artificial intelligence spending.

"The combination of deteriorating cash flows and rising capital commitments means the debate over whether AI returns can ultimately justify the scale of investment may not be resolved anytime soon," Emmanuel Cau, head of European equity strategy at Barclays, said.

Apple's upcoming earnings report is another major focus for investors. Analysts are expected to examine the company's outlook for the crucial holiday quarter, management's comments on artificial intelligence and the redesigned Siri assistant.

Rising memory-chip costs are also expected to weigh on Apple's profitability. Analysts anticipate that quarterly profit growth could fall to its weakest level in six quarters.