After a sharp sell-off in tech stocks last Friday, U.S. stock index futures rose. European stock markets lacked a clear direction on Monday, temporarily stopping the intense selling of artificial intelligence-related stocks that had occurred earlier. At the same time, a decline in international oil prices provided support for the stock markets, helping the market to start the new month with a relatively positive outlook.

As of press time, the Dow Jones futures have risen by 0.61%, the S&P 500 index futures have risen by 0.54%, and the Nasdaq futures have risen by 0.80%.

The global financial markets are facing a critical week. Investors are still digesting the latest monetary policy decisions made by the Federal Reserve and the European Central Bank, while the corporate earnings season is also in full swing. In addition, the mid-term elections in the United States will take place on Tuesday, further increasing market uncertainty.

MSCI Global stock indices have stabilized, with the European Stoxx 600 index remaining virtually unchanged. The decline in energy-related stocks offset the gains from consumer stocks. After Alstom, a French rail transit equipment manufacturer, lowered its full-year performance forecast and announced a comprehensive restructuring plan, its stock price plummeted by 27%.

As the mid-term elections in the United States are approaching, investors continue to remain cautious. Meanwhile, the challenges faced by European stock markets differ from those of the U.S. market. Sebastian Raedler, the head of European equity strategy at Bank of America, wrote in a report: "The Eurozone Purchasing Managers' Index ( PMI ) is expected to decline further, which will weigh on our forecast for the performance of the European Stoxx 600 index."

He added, "However, the main reason for our caution regarding European stocks is that the capital expenditure cycle for artificial intelligence may be disappointing. As the AI models become increasingly commoditized and it becomes evident that the competitive moats of companies are relatively limited, the related investments may not meet previous market expectations."

MSCI Although the Asia-Pacific index fell by 0.2%, most of its constituent stocks still recorded gains. Meanwhile, the stock price of Kioxia Holdings, a Japanese memory chip manufacturer, tumbled after it issued a cautious performance outlook, indicating that concerns about the future prospects of the AI industry still exist in the market. The South Korean KOSPI index rose by 2.24%. Previously, the South Korean stock market had fallen by 16% in October.

The Stephan Kemper from the German department of BNP Paribas Wealth Management in Paris, France, stated: "The financial reports released by Japanese tech companies have been mixed, which seems to continue to maintain a high level of skepticism in the market. When it comes to AI and the risk of slowing growth, investors still tend to view the situation pessimistically, and they are harshly critical of any company that fails to meet nearly perfect expectations."

The chief investment strategist of ING Group, Simon Wiersma, stated: "Compared to the sell-off last Friday, this rebound is relatively limited, so I will not yet interpret it as a convincing 'buy on dips' signal. There are still enough uncertainties surrounding AI investments, interest rates, and geopolitics that prompt investors to remain cautious."

Last Friday's sell-off indicates that investors are becoming increasingly impatient with tech companies whose core business growth has slowed down, but whose AI expenditures continue to rise. The tech giants with the largest AI investment scales have been borrowing heavily to fund related infrastructure construction. Alphabet launched its second eurobond issuance of the year on Monday. Previously, the company had raised 9 billion euros (about 10 billion US dollars) through the eurobond market in May of this year.

Morgan Stanley's chief U.S. equity strategist, Mike Wilson, believes that the stock market will experience several risk-clearing events in the future. These factors may temporarily drive the market down further, but they will also create opportunities for investors to increase their stock allocation again.

Wilson pointed out that factors such as the U.S. mid-term elections, AI investment pressures, and liquidity constraints could push the S&P 500 index down by about 9% from its previous historical high to around 7,100 points. However, he remains optimistic about the long-term trend of the stock market. He expects that once these risk factors gradually subside and the adjustments that have been ongoing within the market over the past period finally come to an end, the S&P 500 index is expected to rise further to 8,000 points.

Barclays Bank strategist Ajay Rajadhyaksha and others pointed out in the report: "In our view, the market performance of recent weeks does not indicate that AI trading is coming to an end. We believe this is more like a normal market adjustment, similar to the two previous corrections that have occurred before 2026. In the first two adjustments, strong corporate earnings ultimately overcame market concerns."

Follow the U.S. mid-term elections

Investors expect that if the Democratic Party wins comprehensively in the U.S. midterms, the U.S. stock market may face downward pressure, as markets will begin to factor in the risk of rising corporate tax rates and stricter AI regulations.

Polls indicate that the Democratic Party is likely to win control of the House of Representatives, but the Senate race remains close. This means that even if the Democrats prevail, they may not be able to secure a two-thirds majority in both chambers sufficient to override the President's veto power.

In contrast, Apple has always been a relatively calm haven among technology stocks, as the company has not invested billions of dollars in data center construction like other large tech corporations. Apple's stock price has been rising for four consecutive months, helping it surpass NVIDIA to become the publicly traded company with the highest market value in the world.

Goldman Sachs analysts expect that the capital expenditures of hyperscalable cloud computing companies will nearly double this year, reaching $800 billion, and will further grow to $1.2 trillion by 2027. At the same time, they predict that the earnings per share growth of S&P 500 index components will slow down from nearly 30% in 2026 to 18% in 2027.

Goldman Sachs' chief U.S. equity strategist, Ben Snider, wrote in a report: "Corporate earnings results highlight the fundamental challenges that stock investors are currently facing."

The status of the US dollar as a safe-haven asset is being questioned.

Reports suggest that U.S. President Donald Trump wishes to give more time to diplomatic negotiations with Iran, and this news has alleviated the pressure on rising international oil prices, causing Brent crude oil to fall by over 4%, approaching $108 per barrel.

Meanwhile, as the mid-term elections in the United States and a series of employment data are about to be released, long-term U.S. Treasury bond prices have risen.

In the foreign exchange market, the overall volatility of major currencies was limited. The US dollar fell by 0.2%, while the euro rose by 0.37% against the US dollar to 1.1199; the US dollar against the Japanese yen remained relatively stable around 157.72.

At the same time, investors have also begun to question the status of the US dollar as a safe-haven asset. They are concerned that if tech stocks once again dominate market selling, the US dollar may no longer benefit from the inflow of safe-haven funds as it has in the past, and instead face downward pressure.

George Saravelos, the head of global foreign exchange strategy at Deutsche Bank, stated that the United States' dependence on foreign capital flowing into the stock market is unprecedented in history. There is already evidence that when stock market shocks mainly originate from within the United States, the correlation between the US dollar and stocks turns positive.

This week, the non-farm payroll data is coming out.

Among the major central banks that will hold monetary policy meetings this week, markets expect the Reserve Bank of Australia, the Bank of England, and the Swedish Central Bank to raise interest rates, while it is anticipated that the Norwegian Central Bank will keep interest rates unchanged.

In terms of economic data, what is worth paying attention to this week includes the U.S. ISM manufacturing survey for October, which was released later on Monday, as well as the much-anticipated U.S. non-farm payroll report on Friday.

The price of gold has been hovering around $3,900. Independent financial market analyst Nikos Tzabouras stated: "The market's optimism about a breakthrough through diplomatic channels between the United States and Iran, as well as new concerns about whether the AI craze can continue, are prompting investors to re-evaluate just how much more monetary policy tightening the Federal Reserve may need to implement. This has created conditions for a rebound in gold prices, but this rebound may be difficult to sustain."

Focus on Individual Stocks

Deutsche Bank raised its rating of the cybersecurity company CrowdStrike from “Hold” to “Buy”, and the stock price rose by 3.4%. Analyst Brad Zelnick stated that the market “has not yet fully realized to what extent artificial intelligence will expand the cybersecurity market”. Its peer PANW (Palo Alto Networks) also saw a 2% increase, driven by sector sentiment.

LiVian, a company in the electric vehicle industry, saw its stock rise by 3.8% after UBS upgraded its rating for the company. Analyst Joseph Spark stated that the recent sharp drop in stock price presents an opportunity to buy before the turning point in the ramp-up of SUV production capacity in the R2 mid-size segment.

The storage chip sector generally saw gains. Following a significant sell-off on Friday, trading funds have flowed back into AI related targets. Micron, Sandisk, and Western Digital each rose by about 2%.

Cosmetics company Estée Lauder announced its financial results for the first quarter of the fiscal year, which exceeded analysts' expectations, and its stock price rose by 3.5%. Estée Lauder's adjusted earnings per share were $0.72, with revenue at $3.72 billion. FactSet Analysts expected earnings per share to be $0.51 and revenue to be $3.65 billion. The company also raised its full-year profit forecast.

Maywell Technology's stock price rose slightly by 3%; Lumenteng increased by 2% before being suspended from trading. Meiman Electronics reached an agreement to acquire Lumenteng, with this transaction betting on the AI data center sector and valuing Lumenteng. The transaction is expected to be completed in the first half of 2028, and the merger of the two companies will create a AI leader in the connectivity industry.

At the beginning of this week, oil prices declined, putting pressure on the energy sector. ExxonMobil fell by 1.2%, Chevron dropped by nearly 1%, and Valero Energy retreated by 1.5%.

Following the pullback on Friday, investors bought in at lower prices, and the two stocks Bloom Energy and Vertiv saw a slight rebound. Bloom Energy tumbled by 8% on the previous trading day but rose by 2.3% this time; the digital infrastructure company Vertiv fell by 5% last Friday but rose by 2.5% this time.