Weekly Outlook: Europe Before the U.S. – “A Rare Development”

The new week is all about tomorrow's U.S. midterm elections. In addition, following the recent sell-off in tech stocks, AI valuations remain a key focus. For once, European markets are outperforming U.S. markets.

November 2, 2026. FRANKFURT (Deutsche Börse). While U.S. tech stocks continue to fall, the DAX (DE0008469008) is holding up relatively well. Although the index was unable to hold onto the levels above 26,000 points reached on Thursday, it closed the week at 25,782 points—still the highest level since early September. On Monday morning, it stood at 25,793 points. “Sentiment in the German economy continues to brighten,” notes Ulrich Kater of DekaBank. He points to the ifo Business Climate Index, which rose in October for the sixth consecutive month—reaching its highest level since May 2023.

“Since the start of earnings season, the European stock market has clearly gained ground. In contrast, the S&P 500 has lost ground,” he explains, describing this as a “development rarely seen in recent years.” Although U.S. companies, with 32 percent earnings growth in the third quarter, still outperformed their European counterparts, which posted growth of over 25 percent, some U.S. tech heavyweights have disappointed in terms of their core business and outlook. “As a result, U.S. semiconductor stocks have recently lagged behind European stocks by as much as 20 percent.”

Record Plunge in Intel’s Stock Price

On Friday, the Nasdaq 100 (US6311011026) actually plummeted rapidly. The most recent trigger: the earnings and outlooks from Amazon (US0231351067) and Intel (US4581401001). “The downward trend accelerated when Intel experienced a record 28.6 percent plunge after reporting disappointing quarterly results, dragging numerous other stocks in the semiconductor sector down with it,” reports LBBW analyst Berndt Fernow.

Overall, high oil prices are also weighing on the stock markets. A barrel of Brent crude (XC0009677409) is currently trading at $111 due to concerns about further escalation in the Middle East. Gold and Bitcoin have recently seen losses. A troy ounce of gold (XC0009655157) is now trading at just $3,900, while Bitcoin is trading at $78,000 due to the billion-dollar hack of the Binance crypto exchange.

“A Divided U.S. Government Is Better”

The highlight of the week, however, is likely to be the U.S. congressional elections. Commerzbank expects that the Democrats are very likely to win the House of Representatives and will probably also secure a majority in the Senate. “A ‘divided government’ has been the rule rather than the exception over the past 50 years,” notes analyst Bernd Weidensteiner. This has actually been good for the capital markets—likely because it has prevented extreme ideological approaches from gaining traction. “Since 1969, the S&P 500 has, on average, risen 9 percent per year under a ‘divided government’—a stronger gain than the 5 percent seen under a ‘unified government,’” he explains.

“Things could get rough for the markets”

But first, things could get difficult, says Yannik Mosbach of Metzler Research. “If the Democrats win the election, we can’t rule out the possibility that Trump won’t accept the result,” he notes. Things are likely to get particularly rough for the markets if the situation doesn’t stop at verbal attacks but actually escalates to the point where election results in individual states are not accepted.

At the same time, earnings season continues. In the U.S., Apple’s figures are in the spotlight, and Palantir and AMD are also reporting their results. Here in Germany, Bayer, Lufthansa, BMW, Deutsche Telekom, Commerzbank, and DHL, among others, are reporting. Also important: the U.S. jobs report on Friday.

Key Economic and Business Data

Tuesday, November 3

U.S.: Congressional midterm elections. Election results are expected to be available on Wednesday morning, German time.

Wednesday, November 4

11:00 a.m. Eurozone: October consumer prices. Commerzbank forecasts 3.8 percent for the headline rate and 2.5 percent for the core rate.

Thursday, November 5

8:00 a.m. Germany: September new orders. Commerzbank believes that improved sentiment among industrial companies offers cause for optimism and expects a strong increase of 3 percent compared with the previous month.

11:00 a.m. United Kingdom: Bank of England interest rate decision. According to DekaBank, the need for action is growing in light of persistently high energy prices and robust economic growth. It expects the key interest rate to be raised to 4 percent.

Friday, November 6

8:00 a.m. Germany: September industrial production. According to DekaBank, production in Germany’s manufacturing sector rose unexpectedly sharply in August, thanks to exceptionally strong growth in the construction industry. The bank now expects a moderating rebound in September.

2:30 p.m. U.S.: October Employment Data. In the U.S., employment growth has fluctuated considerably in recent months, as Commerzbank notes. Overall, employment has risen slightly. Given the now significantly reduced level of immigration, this is sufficient to keep the unemployment rate stable at a low 4.2 percent. For October, Commerzbank forecasts job growth of 60,000. 


 

By Anna-Maria Borse, October 30, 2026, © Deutsche Börse AG