Strong corporate reports support stock indices. EU countries supported a plan to phase out imports of Russian oil and gas

By the end of Monday, the Dow Jones Index (US30) had grown by 1.12%. The S&P 500 Index (US500) rose by 1.07%. The technological Nasdaq index (US100) closed higher by 1.30%. On Monday, US stock indices closed with notable gains amid optimism surrounding upcoming corporate reports and a new wave of support for the banking sector, while investors continued to assess the prospects for easing trade restrictions between the US and China. The S&P 500 and Dow Jones reached new historical highs.

Wells Fargo and Citigroup jumped by 3.3% and 2.3% respectively, and other major banks also strengthened noticeably as investors reassessed the credit stress risks that had been pressuring the sector since the beginning of the month. Apple’s stock rose by 4.4%, setting a new historical high amid signals of high iPhone 17 sales in the US and China.

European stock markets went mostly up on Monday. Germany’s DAX (DE40) grew by 1.80%, France’s CAC 40 (FR40) closed higher by 0.39%, Spain’s IBEX35 Index (ES35) rose by 1.46%, and the UK’s FTSE 100 (UK100) closed up 0.52%. European stocks in the financial and defense sectors showed strong growth, but BNP Paribas dropped sharply after a US court ruling. BNP Paribas plummeted by 7.7% after a US court ordered the bank to pay $20.75 million in connection with alleged ties to war crimes in Sudan.

On Monday, EU energy ministers supported a plan to phase out imports of Russian oil and gas by January 2028. The bill must still be negotiated with the European Parliament before final adoption. The goal of the initiative is to reduce Russia’s energy revenues, which help finance its war against Ukraine. Russia currently supplies about 12% of the EU’s gas, whereas the share was 45% before the 2022 invasion. Among the countries that still import Russian gas are Hungary, France, and Belgium.

On Tuesday, WTI oil prices continued to fall for the second consecutive session. Market pressure was intensified by fears of a global supply surplus and uncertainty surrounding the upcoming trade negotiations between the US and China. The volume of oil in marine transit rose to a record 1.24 billion barrels, indicating a worsening supply-demand imbalance and supporting bearish sentiment.

Asian markets rose steadily yesterday. Japan’s Nikkei 225 (JP225) grew by 3.37%, China’s FTSE China A50 (CHA50) rose by 0.74%, Hong Kong’s Hang Seng (HK50) was up by 2.42%, and Australia’s ASX 200 (AU200) showed a positive result of 0.41%. Positive sentiment was supported by a strong rally in US futures after President Donald Trump stated that he might lower tariffs on Chinese goods if Beijing took reciprocal steps, including resuming purchases of US soybeans. Optimism was reinforced by expectations of additional stimulus from Chinese authorities following the release of Q3 GDP data, which showed growth of 4.8%  the lowest in a year. This week, China’s political leadership is holding meetings to prepare a new Five-Year Plan ahead of the December Politburo and Central Economic Work Conference meetings. The seasonally adjusted unemployment rate in Hong Kong rose to 3.9%. Looking ahead, authorities expect that certain sectors will continue to face labor market difficulties due to structural changes in the economy and external risks.

On Tuesday, the Australian dollar broke its two-day rally, despite optimism fueled by a breakthrough in the trade agreement between the US and Australia. The two countries recently signed a critical minerals partnership.

The New Zealand dollar fell on Tuesday, losing its gains from the previous session amid expectations of further rate cuts by the Reserve Bank of New Zealand. Although third-quarter inflation data showed price growth reaching a yearly maximum of 3%, which is at the upper limit of the RBNZ’s target range, the bank’s preferred inflation indicator remained at its lowest level since the beginning of 2021, and other core indicators also point to restrained price pressure. Futures swaps fully price in a 25 basis point rate cut in November.