European stocks edged higher on Monday, with the STOXX 50 and STOXX 600 both gaining 0.3%, as investors braced for a busy week of key economic and policy announcements. Markets are awaiting interest rate decisions from the Federal Reserve and the European Central Bank, alongside inflation and GDP data from the Eurozone’s largest economies and a fresh batch of corporate earnings. Meanwhile, Moody’s maintained France’s credit rating at Aa3 and its negative outlook on Friday, despite ongoing political unrest. The banking sector was among the top performers, with BNP Paribas rising 1.5% and UniCredit gaining 1.4%. Hermes also traded higher, advancing 2.2%. On the other hand, Banco Santander (-4.9%) and Telefonica (-7.5%) tumbled and Galp fell almost 8% to bottom the STOXX 600 despite posting strong quarterly results, as talks with Spain's private equity-backed Moeve to combine their refining, chemicals and fuel retail businesses had broken down.

Spain’s producer price inflation accelerated to 18.3% year over year in September 2026, up from 13.2% in August, marking the steepest increase since November 2022. The acceleration was primarily driven by a sharp rise in energy costs, with prices surging 49.8%, compared with 33.3% in the previous month. Inflation also picked up for intermediate goods (7.5% vs. 7.1%) and durable consumer goods (3.9% vs. 3.6%). In contrast, price growth eased slightly for capital goods (2.3% vs. 2.4%) and non-durable consumer goods (0.1% vs. 0.2%). On a monthly basis, producer prices rose 4.0%, the largest increase since March.

Sweden’s producer prices climbed 11.2% year-on-year in September 2026, accelerating from 6.8% in August and marking the highest annual rate since January 2023. The pick up was mainly driven by higher energy prices, with prices for energy-related products surging 42.1%. Meanwhile, prices for capital goods rose by 3.1%, while consumer goods prices increased by 1.0%. Excluding energy-related products, producer prices rose by 6.2%. On a monthly basis, producer prices rose by 3.4% in September, following a 0.9% increase in August, marking the fastest rise since March 2022. Higher prices for trade services of electricity and refined petroleum products contributed significantly to the monthly increase, while price gains for basic chemicals, basic metals and district heating also provided support. However, lower food prices partially offset the increase, according to Statistics Sweden.

Japan’s Nikkei 225 Index dropped 0.8% to close at 62,189 on Monday, entering its third straight week of declines as concerns over the sustainability of massive artificial intelligence spending weighed on sentiment. Investors are now looking to earnings reports from major technology companies this week for further insight into the outlook for AI-related stocks. Meanwhile, markets are preparing for upcoming monetary policy decisions, with central banks in the US, Japan and the Eurozone widely expected to maintain current interest rates before potentially raising them later this year. On the geopolitical front, investors remained wary of the possibility of renewed US strikes against Iran following next week’s midterm elections, alongside potential retaliation from Tehran against US allies in the region. Japanese technology stocks remained under pressure, with sharp losses from Kioxia Holdings (1.6%), Advantest (3.9%), Disco Corp (1.8%), Tokyo Electron (3.7%) and Ibiden Co (3.1%).

The Brazilian real is expected to fall by more than 10% on Monday, while equities are also poised to tumble following President Luiz Inácio Lula da Silva’s narrow re-election victory over Senator Flávio Bolsonaro in Sunday’s runoff. With nearly all ballots counted, Lula secured 51.8% of valid votes, while Bolsonaro received 48.2%. Lula’s win defied polls that had favored Bolsonaro after his narrow first-round lead earlier this month. Since Brazil restored direct elections in 1989, Lula is the first candidate to win a runoff after losing in the first round. Meanwhile, Bolsonaro has called for the election results to be annulled. Investors are focused on the nation's increasingly fragile fiscal outlook and how Lula’s new administration plans to curb public spending and stabilise the high debt burden. Public debt has climbed above 82% of GDP, raising concerns over debt sustainability and contributing to higher borrowing costs.

Brent crude fell toward $115 per barrel on Monday, retreating from multi-month highs despite fears that strikes against Iran could resume following this week’s Israeli elections and next week’s US midterm elections. President Donald Trump said on Sunday that he would soon decide whether to pursue a deal with Tehran or restart military operations, as threats from Iran and the Houthis against Americans in the Middle East continue to escalate. Iran is reportedly prepared to retaliate, potentially targeting Israel and the UAE. Meanwhile, clashes between Saudi Arabia and Iran-backed Houthi rebels intensified over the weekend, with the rebel group claiming to have targeted King Khalid International Airport in Riyadh in response to Saudi strikes on Sanaa and other parts of Yemen on Saturday. Despite these developments, Middle Eastern crude exports have recovered to near prewar levels, although a renewed escalation in the conflict could further disrupt regional energy supplies.