Crude oil fell 4.5% toward $99 a barrel on Monday as hopes for a diplomatic resolution to the conflict between the US and Iran eased concerns about further supply disruptions. Reports indicated that President Donald Trump wants to give negotiations more time before considering renewed military action, telling Israeli Prime Minister Benjamin Netanyahu that he would prefer a diplomatic solution. US Secretary of State Marco Rubio also said Trump favoured resolving the conflict peacefully. Iranian officials similarly signalled that an agreement remained possible following two days of Qatar-mediated talks, provided that commitments were implemented in practice. However, the diplomatic signals come amid continued reports that both sides are preparing for a possible escalation after the November 3 US midterm elections. Separately, OPEC+ agreed to keep its existing production targets unchanged through December as the group continues to assess global supply and demand conditions.

Italy’s manufacturing PMI fell to 49.4 in October 2026 from 50.4 in September, below expectations of 50.2 and marking its weakest reading since January. The decline reflected subdued demand, with new orders falling for a fourth consecutive month and production contracting at its fastest pace since the start of the year. Geopolitical uncertainty continued to weigh on customer demand, while manufacturers also reduced purchasing activity and cut employment for the first time since July. Firms further lowered inventories, preferring to maintain leaner stocks despite persistent supply-chain disruptions. Delivery times lengthened at the sharpest rate in three months. Meanwhile, inflationary pressures intensified, reaching a four-month high. Companies passed some of these increases on to customers, pushing selling-price inflation to its highest level in three months. Despite continued optimism about the year ahead, business confidence weakened.

The S&P Spain Global Manufacturing PMI rose to 52.2 in October 2026 from 51 in September, above market expectations of 50.8 and marking its highest reading since August 2025. Production and new orders increased simultaneously for the first time in six months, supported by stronger domestic and foreign demand. The improvement in orders, combined with production delays and slightly lower employment, pushed backlogs of work to their fastest increase since August 2025. Supply-chain disruptions persisted, with delivery times lengthening sharply amid vendor stock shortages and delays on key maritime routes. Manufacturers responded by increasing purchasing activity for the first time since November 2025. However, higher costs for energy, fuel and transportation, alongside more expensive metals, drove the fastest input price inflation since May. Firms raised selling prices accordingly. Looking ahead, business confidence weakened amid cost pressures and geopolitical uncertainty.

Stocks in Europe were cautious to kick off the week, with the STOXX 50 trading around the flatline and the STOXX 600 decreasing 0.2%, following a losing session on Friday. Trades brace for a busy week that includes the midterms in the US. At the same time, oil prices extended the decline amid reports that the US and Iran are seeking diplomatic options to end the conflict. Novartis (-1.8%) and AstraZeneca (-1.4%) traded lower and SAP fell 0.8%. Alstom sank more than 31% after cutting guidance again and energy stocks were also in the red, including Shell (-0.5%) and TotalEnergies (-0.4%). In contrast, the tech sector was in the green, with ASML Holding rising 1.2% and Infineon increasing 1.4%. The banking sector also advanced, including Banco Santander (1.5%), Unicredit (1.2%) and Deutsche Bank (1.4%).

Germany’s retail sales dropped 2.0% month-on-month in September 2026, reversing a downwardly revised 1.2% increase in the previous month and missing market expectations for a 0.4% gain. This marked the fourth monthly decline so far this year, driven by falls in both food sales (-1.3%) and non-food sales (-2.4%). Online and mail-order sales also declined 2.2%, pointing to weaker e-commerce demand. On an annual basis, retail sales contracted 2.3%, deepening from a downwardly revised 0.3% decrease in August.

Indonesia’s annual inflation edged down to 3.23% in October 2026 from September’s three-month high of 3.28%, coming below market expectations of 3.29% and staying within Bank Indonesia’s target range of 1-1/2%-3-1/2%. Price growth slowed for recreation (1.76% vs 1.81% in September), education (1.35% vs 1.43%), and personal care (4.52% vs 7.77%). Meanwhile, cost accelerated for housing (1.06% vs 1.02%), transport (4.87% vs 4.84%), clothing (1.26% vs 1.20%), furnishings (2.39% vs 2.19%), healthcare (2.31% vs 2.24%), and communication (1.91% vs 1.83%). Food inflation hit a five-month peak (4.82% vs 4.37%), reflecting the lingering effects of El Niño disruptions. Core inflation, which excludes volatile food and government-administered prices, fell to 2.56% from 2.84% in September, marking a six-month low and falling short of forecasts of 2.75%. Monthly, consumer prices rose 0.22%, slowing from 0.3% in September and undershooting forecasts of 0.25%, but marking a third monthly increase.