FX168 Financial News Agency (Europe) News Monday (October 21) global stock markets performed flat after a strong rally the previous week, with increased bets on Donald Trump winning the upcoming USA presidential election driving Bitcoin and gold to new highs. As tensions escalate in the Middle East, oil prices rise. Investors are looking forward to this week's intensive corporate earnings reports to further understand economic strength.

The European Stoxx 600 index remained largely flat ahead of heavyweight German company SAP's earnings report, which could set the tone for a busy earnings week on both sides of the Atlantic.

"Earnings reports will be very important in guiding stock direction - regardless of whether current valuations in the USA are justified," said Chris Scicluna, Head of Economic Research at London Daiwa Capital Markets.

S&P 500 index futures were almost unchanged after the S&P 500 index set a closing record and rose for the sixth consecutive week.

China awaits more stimulus details.

Meanwhile, China's CSI 300 index rose after domestic banks lowered loan rates and increased recent stimulus measures.

The optimism initially brought by a series of stimulus measures announced in late September in Beijing has turned cautious as investors await more fiscal support details from policymakers.

Although China lowered its benchmark loan rate on Monday, this move was expected. China's blue-chip stock index rose by only 0.2%, with investors awaiting further details on China's stimulus plans.

Morgan Asset Management global market strategist Chaoping Zhu said in Shanghai: "We may have to wait until the end of October or early November for specific plans at the National People's Congress Standing Committee meeting."

Currently, the global financial markets are influenced by two main factors: on one hand, the perception of the health of major economies, and on the other hand, the impact of Middle East conflicts and geopolitical issues.

Traders are awaiting Tesla and Boeing's financial reports on Wednesday, as well as a series of company reports this week including General Motors, Unilever, Deutsche Bank, and Coca-Cola.

"Optimism about a soft landing is widespread, but this narrative applies more to the United States," said Daniel Murray, CEO of Swiss EFG Asset Management. "Europe's macro backdrop is more fragile, affecting investors' sentiment towards European stocks."

Nevertheless, investors are turning to bonds and other assets for better returns, and Goldman Sachs strategists say that the U.S. stock market may struggle to maintain its exceptional performance of the past decade. This year's 23% gain is concentrated in a few large technology stocks.

Increased Betting on Trump's Reelection

The U.S. 10-year Treasury yield rose by 3 basis points, while the dollar remained stable. With two weeks until the November 5th U.S. election, bets on Donald Trump's victory are increasing.

Republican candidate's tariffs, tax, and immigration policies are believed to have inflationary effects, unfavorable for bonds but favorable for the dollar. It is expected that Trump will take a more crypto-friendly position.

"Currently, Trump is leading in key swing states, indicating a high possibility of returning to the White House. I believe the market has already started pricing this in last week, reflected in the stock market's rise, yield increase, strong performance of the dollar, and a 10% increase in bitcoin over the past week," said IG's market analyst Tony Sycamore.

Bitcoin touched its highest point since late July at $69,487 before slightly pulling back. The world's largest cryptocurrency rose 9.6% last week, with an increase of over 8% so far this month.

The U.S. Dollar Index, which measures the value of the U.S. dollar against a basket of currencies, rose by 0.16% to around 103.60, not far from the two-month high set last week. The pound and the euro each fell by about 0.2% against the dollar, while the dollar rose by 0.25% against the yen to around 149.90.

In the bond market, the yield on the benchmark 10-year U.S. Treasury notes rose by 3.4 basis points to 4.10%, while the two-year Treasury yield increased by 2.5 basis points to 3.98%.

Gold climbed to a historical high of around $2736, with Comex gold even reaching $2750, as investors increased their gold holdings in anticipation of the highly contested U.S. presidential election.

"This month's increase is primarily driven by safe-haven demand, mainly due to the geopolitical tensions in the Middle East and the uncertainty of the U.S. election. As the outcome is very tight, either side could win," said Soni Kumari, a commodity strategist at ANZ Bank.

Tim Waterer, Chief Market Analyst at KCM Trading, stated that for gold, "$2800 seems to be a target achievable by the end of the year... Some might opt to lock in profits, which could slow down the short-term rise in gold prices."

Oil prices rebounded slightly last week after falling over 7% due to concerns about Chinese demand and potential supply disruptions in the Middle East. Brent crude oil traded above $73 per barrel, while U.S. WTI crude oil futures rose above $70 per barrel.

In the Middle East, Israel is discussing an attack on Iran after a Hezbollah drone exploded near the private residence of Prime Minister Benjamin Netanyahu over the weekend.