World stocks gain ahead of 'formidable' week for risk; oil prices ease

By Chris Prentice and Amanda Cooper

NEW YORK/LONDON, Oct 26 (Reuters) - Global shares advanced on Monday, with investors focused on a week of central bank meetings and corporate earnings that will test confidence in the AI boom. 

Oil prices retreated after Friday's strong gains, but prices remained near recent highs as persistent attacks on key producer Saudi Arabia kept traders wary. The Houthi group in Yemen said on Monday it had attacked Saudi Arabia's East-West crude oil pumping stations and Riyadh airport.

MSCI's gauge of stocks across the globe rose 5.05 points, or 0.45%, to 1,124.02.

On Wall Street, the S&P 500 and Nasdaq were poised for their biggest one-day rallies in more than a month on tech strength after Anthropic's initial public offering filing. 

The Dow Jones Industrial Average rose 117.37 points, or 0.22%, to 52,332.53, the S&P 500 rose 58.22 points, or 0.76%, to 7,681.90 and the Nasdaq Composite rose 265.87 points, or 1.02%, to 26,220.87. 

Brazilian stocks posted historic losses. The country's stock exchange halted trading via a circuit breaker safety mechanism on Monday after President Luiz Inacio Lula da Silva's reelection. His opponent refused to concede.

In Europe, stocks rebounded on corporate optimism. The STOXX 600 closed up 0.77%, led by gains in British technology services provider Computacenter and Danish biotech Genmab.

BIG WEEK 

Traders awaited multiple central bank meetings and earnings from AI hyperscalers. Earnings are in store from Alphabet, Microsoft and Amazon, as one-third of S&P 500 companies report.

"The combination is formidable: megacap earnings, AI funding concerns, global semiconductor results, five major central bank meetings and potentially market-moving inflation and growth data," said Chris Weston, Pepperstone's head of research.

"The danger isn't simply that markets move sharply. It's that one catalyst changes the interpretation of the next, creating feedback loops across equities, rates, FX and volatility," Weston added.  

New Zealand's central bank is widely expected to raise rates on Wednesday. Markets assume the US Federal Reserve will stand pat, but they imply an 80% chance that it will hike rates in December. Much the same is priced in for the Bank of Japan and the European Central Bank.  

A key reading on US core inflation should show cost pressures remained elevated at 3.1% in September, while the economy is forecast to have grown at a brisk 3.2% annualized pace thanks in part to spending on data centers.

"The most important risk is that oil futures are above our forecasts, largely reflecting concerns about potential further conflict with Iran," analysts at Goldman Sachs said in a note. "The more extreme and long-lasting the energy shock becomes, the more Fed participants will worry that inflationary pressures could broaden."

Emerging market stocks fell 15.27 points, or 0.97%, to 1,562.77. MSCI's broadest index of Asia-Pacific shares outside Japan closed lower by 0.15%, at 1,505.49.

TREASURIES AND CURRENCIES

The Brazilian real plunged more than 11% after the presidential election.

The yield on benchmark US 10-year notes fell 0.58 basis points to 4.982%. The yield on the benchmark German 10-year Bund rose. 

In currency markets, the Japanese yen slipped 0.36%, and the euro was down 0.13% after France dodged a credit downgrade last week. 

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.25%.

Sterling dipped 0.16%, with Britain's new finance minister John Healey set to deliver his first budget on Wednesday amid rising global borrowing costs and high energy prices due to the US-Israeli war with Iran.

Spot gold rose 0.61% to $4,019.96 an ounce, rebounding from the prior session's more than three-month low. [GOL/]

US gold futures settled 0.8% higher at $4,038.40 per ounce.

Saudi Arabia, which along with Turkey and Pakistan was set to hold talks with Iranian officials in Tehran, said it was important to open channels for negotiations.

On Sunday, Qatari mediators traveled to Tehran to try to de-escalate regional tensions in coordination with the United States, an official briefed on the situation said.

Brent crude futures fell to $116.01 per barrel, down 0.64% as US crude fell 1.27% to $101.96.

(Additional reporting by Wayne Cole in Sydney; Editing by Chris Reese, Thomas Derpinghaus, Alexander Smith, Keith Weir, Rod Nickel)