Global Stocks Rise Ahead of Tech Earnings and Central Bank Decisions

Global stock markets mostly advanced Monday as investors assessed the outlook for major technology companies and prepared for monetary policy decisions from the Federal Reserve, European Central Bank (ECB), and Bank of Japan (BoJ). Oil prices also retreated after reaching a six-month high, as concerns about energy supplies ahead of the Northern Hemisphere winter had driven prices higher.

European markets posted gains in late-morning trading, with London's FTSE 100 rising 0.5% to 10,738.81 points, Paris's CAC 40 gaining 0.8% to 7,841.19, and Frankfurt's DAX advancing 0.9% to 25,396.97. In Asia, Tokyo's Nikkei 225 closed down 0.8% at 62,189.65, while Hong Kong's Hang Seng Index gained 0.5% to 23,211.81.

Investor attention centered on upcoming earnings reports from Microsoft, Alphabet, and Amazon, with markets seeking evidence that heavy investment in artificial intelligence infrastructure will translate into sustainable profits. South Korean chipmakers SK hynix and Samsung are also scheduled to report results this week.

Stephen Innes of SPI Asset Management highlighted the scrutiny facing artificial intelligence-related companies ahead of the latest earnings releases.

"The AI complex remains under a microscope ahead of what may be the most important stretch of earnings season so far," noted SPI Asset Management's Stephen Innes.

Innes said investors were demanding stronger evidence of business performance as technology companies continued to spend heavily on computing infrastructure.

"Microsoft, Alphabet and Amazon are about to walk on stage, and this is not one of those quarters where a company can simply beat the number, raise the guidance by a whisker and expect applause. Investors want proof now.

"They want to know whether the billions going into the compute buildout are building a durable earnings machine or just a shinier version of the same old capex furnace," Innes added.

Results from Tesla and Meta last week intensified concerns about corporate spending, contributing to pressure on equity markets. Wall Street finished Friday lower, and Asian markets initially followed that decline on Monday before some recovered.

Central bank policy is another major focus for investors. The Federal Reserve is expected to leave borrowing costs unchanged on Wednesday, but investors will examine policymakers' comments for clues about the outlook following last month's rate increase, particularly as inflation remains well above the central bank's 2% target.

The ECB is scheduled to announce its decision Thursday, with France's deteriorating public finances expected to draw attention. Policymakers are not expected to provide immediate financial relief to the eurozone's second-largest economy.

The ECB is widely expected to keep interest rates unchanged after raising them twice this year. Officials face the challenge of containing inflation driven by the energy shock associated with the US-Iran war while supporting economic activity across the eurozone.

The Bank of Japan is also expected to leave rates unchanged this month. Meanwhile, the Bank of England is widely expected to raise interest rates in November after UK inflation increased ahead of the country's annual budget announcement, scheduled for Wednesday.

Oil prices fell moderately Monday following a surge of more than 3% on Friday, when concerns about supply availability ahead of winter supported the market.