Shares shrug off oil swings as earnings season looms

By Danilo Masoni MILAN, Oct 12 (Reuters) - European shares rose on Monday and US futures held broadly steady as investors looked past a rise in oil prices and focused on the start of earnings season and key US inflation data. Oil markets remained volatile after US President Donald Trump announced an energy-related ceasefire between Ukraine and Russia and proposed increasing Russian diesel exports. However, details of the plan remained unclear, while attacks on shipping and airports in the Gulf underscored ongoing risks to energy supplies.

Brent crude rose to around two-week highs after initially falling, and was last up 1.3% at $106 a barrel, while US crude futures also climbed more than 1%. [O/R] Even so, investors appeared reluctant to take aggressive bearish positions after recent bond-driven market turbulence, with euro zone government bond markets largely stable and the Treasury market closed for the Columbus Day holiday. "We are not seeing a worsening of the situation," said Marco Vailati, head of research and investment at Cassa Lombarda, noting that earnings expectations were helping support sentiment despite lingering concerns over inflation and energy prices. The pan-European STOXX 600 was up 0.6% at 1129 GMT, helped by gains in banks.

S&P 500 futures added 0.05%, though Nasdaq contracts eased 0.15%. In Asia, the session was choppy. MSCI's broadest index of Asia-Pacific shares excluding Japan slipped 0.5%, with Chinese blue chips down 0.7%.

South Korean stocks fell 3.6%, while Taiwan's benchmark was little changed. Attention now turns to big Wall Street banks kicking off the third-quarter reporting season. JPMorgan and Goldman Sachs are due to report on Tuesday and Bank of America on Wednesday.

"Growth expectations remain supportive, and that usually helps markets," said Vailati. "If companies confirm strong results, it's not a good time to be caught underinvested". TSMC, the world's largest manufacturer of advanced AI chips, will likely report a sixth consecutive quarter of record earnings on Thursday.

Earnings from chip-equipment maker ASML are due on Wednesday. S&P 500 earnings are expected to jump more than 30% in the third quarter, according to LSEG IBES, though the bulk of that comes from the tech sector. STOXX earnings are expected to increase 21%, or 9.7% excluding the energy sector.

Treasury yields hit 24-year highs this month as high energy costs fuelled concerns that inflation could stay elevated, keeping policymakers hawkish and pressuring equity valuations. On Monday, euro zone benchmark Bund yields edged lower and French and Italian debt risk premiums fell slightly. [GVD/EUR] US CPI TO HEAT UP, BUT CORE COOLER The market faces fresh challenges this week from US data on consumer and producer prices and retail sales. Rising energy costs are expected to lift CPI by a hefty 0.6% to an annual 3.7%, though the core is seen cooler at 0.2% and 2.5%.

"Oil prices remain higher than we had assumed as shipping costs have soared and product prices are even higher," said Bruce Kasman, head of global economics at JPMorgan. "The signals on inflation point to a sharp rebound in headline inflation that will squeeze purchasing power and a firming in core inflation that will keep central banks focused on near-term hikes." Markets imply only a 19% chance of a rate increase from the Federal Reserve this month, rising to more than an 80% chance of a hike in December. Investors are also betting on hikes in the EU, Japan and Britain before the end of the year.

In currency markets, the euro dipped 0.2% to $1.1175, having fallen for five weeks straight on angst around France's fiscal health before the 2027 presidential election. The dollar index held near 17-month highs, up around 0.2% at 102.42, and the US currency was a touch firmer against the yen at 158.6 in holiday-thinned trading in Japan. In commodity markets, gold fell 0.5% to $4,170 an ounce, having bounced more than 1% last week. [GOL/] (Reporting by Danilo Masoni and Wayne Cole.

Editing by Thomas Derpinghaus and Mark Potter)

Source: Euronext Markets: Real-time Stock Market Data | live