European Stocks Expected to Fall as US-China Tensions Focus

European markets opened on Thursday with a slight decline in major indices, extending yesterday's declines led by the German DAX, which fell 0.7% in the previous session.

This performance comes amid investor caution due to uncertainty surrounding US-China trade negotiations and the ongoing US government shutdown.

Factors Affecting Market Performance

Mixed Corporate Results

Tesla's third-quarter results delivered mixed results, with revenue exceeding expectations but profits falling short of forecasts. IBM shares fell about 4% after the company reported disappointing revenues in two key software categories.

Global Trade Tensions

Tensions escalated between the United States and China after the US Treasury Secretary confirmed that the White House is considering imposing restrictions on exports to China made using US software, in response to Chinese restrictions on rare earth exports.

Political and Economic Implications

- Asian markets were negatively impacted by escalating trade tensions and the lack of progress in peace talks regarding Ukraine.

- Oil prices jumped about 4% as US sanctions were imposed on Russian oil companies.

- The yield on the 10-year US Treasury note stabilized.

- Gold saw profit-taking ahead of US inflation data.

Global Market Performance

- US Stocks

US stocks closed lower, with the Nasdaq Composite down 0.9%, the Dow Jones Industrial Average down 0.7%, and the S&P 500 down 0.5%, weighed down by disappointing results from Netflix and Texas Instruments.

- European Performance

The European STOXX 600 index fell 0.2%, with major indices declining:

German DAX: down 0.7%

French CAC 40: down 0.6%

UK FTSE 100: up 0.9% thanks to a weaker pound

Future Outlook

Analysts expect continued uncertainty in global markets, with investors focusing on developments in US-China relations, corporate earnings, and key economic data, including US inflation data due this week.