European markets kicked off November trading on a steadier footing on Monday, offering what looked like a brief respite after the selloff that swept Wall Street at the end of last week. The calmer mood owed much to a retreat in oil prices, as traders weighed renewed hopes of a resolution to the US-Iran conflict.

Crude oil opened the week lower and extended its losses, with WTI falling 4.1% to $99.80 and slipping back below the $100 mark as optimism about a potential US-Iran deal returned. Crude benchmarks typically carry a geopolitical risk premium when supply disruptions are in play, so negotiation headlines tend to feed directly into prices. Gold drew support from the same development, bouncing from a key support zone and rising 0.6% to around $3,900 — a reminder of the metal's traditional appeal as a store of value when geopolitical and market stress rise.

In the bond market, 10-year Treasury yields were largely unmoved, easing 1.8 basis points to 4.91%. Yields at these levels underpin borrowing costs across the economy, so their direction from here may hinge on whether investors seek safety in bonds again if the selloff in technology shares resumes later this week.

Equity markets were quiet overall. European stocks ended little changed, while US index futures managed a modest bounce after Friday's rout: S&P 500 futures gained 0.3% and Nasdaq futures rose 0.7%. Even so, there is still some way to go in erasing the pessimism of the past few weeks, with investors fearful that the massive spending on AI infrastructure will fail to generate returns quickly enough. The AI buildout has been one of the central pillars of the equity rally in recent years, which is why doubts over its payback carry such weight for sentiment.

The dollar was mixed, holding lower against European currencies but firmer against the yen and the antipodean currencies. EUR/USD rose 0.5% to 1.1217, while USD/JPY added 0.2% to 157.87. Among the majors, the Swiss franc led on the day, with the Australian dollar lagging.

As for gold, the precious metal held near $3,900 after a modest bounce off its 100-week moving average. The immediate pressure has eased somewhat, but the technical picture remains fragile amid further selling and liquidations, particularly if the broader risk mood comes under fire again.

Elsewhere in the day's coverage, the Bank of Japan continued to reaffirm that inflation is here to stay, raising the question of what is holding back another rate hike. Germany's retail sales slumped in September, adding consumer weakness to the European Central Bank's concerns, while the eurozone manufacturing PMI held up in October, though rising price pressures gave the ECB another headache. Taken together, the readouts underline the tension policymakers face between softening demand and persistent price pressures.

For now, all eyes turn to the US midterm elections tomorrow, the next key risk event for markets. The vote will determine the composition of the House of Representatives and roughly a third of the Senate, shaping the legislative agenda for the remainder of the presidential term. Alongside the ballot, the trajectory of the US-Iran talks will stay on traders' radars, given how sensitive crude has been to deal headlines.

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Source: investingLive European session wrap: Oil sinks, stocks steady as US midterm elections loom