European stocks higher; Fed speakers soothe nerves, BMW gains

Investing.com - European stock markets rose Tuesday, with investors returning their focus to potential central bank moves while keeping an eye on the conflict in the Middle East.

At 03:25 ET (07:25 GMT), the DAX index in Germany traded 1.2% higher, the CAC 40 in France climbed 1.2% and the FTSE 100 in the U.K. rose 0.8%.

Central bank speakers boost confidence

A degree of calm has returned to global equity markets, with European indices rebounding after the previous session's losses, helped by relatively dovish comments by Federal Reserve officials which helped to settle nerves which had been frayed by the deepening conflict between Israel and the Palestinian Islamist group Hamas.

Fed Vice Chair Philip Jefferson said the central bank could "proceed carefully" in deciding whether any further increases are warranted, while Dallas Fed President Lorie Logan indicated rising Treasury yields could steer the Fed from further rate increases.

There are a number of Fed officials due to speak later Tuesday, ahead of the release of the minutes of the September monetary policy meeting on Wednesday and then Thursday’s U.S. CPI data.

Additionally, the IMF and World Bank annual meetings in Morocco get into full swing, with European Central Bank President Christine Lagarde set to make an appearance later in the session.

Italian industrial production due

The economic data slate is pretty empty in Europe Tuesday, with the main release being the August Italian industrial production number. 

This is expected to show an annual fall of 5.0%, a deterioration from the previous month’s 2.1% drop, an indication of the difficulties the region is having the day after the equivalent release added fuel to fears of a potential recession in Germany, the eurozone's largest economy.

However, there was some good news on the inflation front as data from market researcher Kantar indicated that British grocery inflation eased to its lowest rate for 15 months heading into October. That said, annual grocery inflation was still 11% in the four weeks to Oct. 1, down from 12.2% in its September report.

BMW gains with sharp jump in EV sales

In corporate earnings news, BMW (ETR:BMWG) stock rose 2% after the German carmaker announced that group sales of its battery-electric vehicles surged by just under 80% year-on-year in the third quarter of 2023. Total group sales increased by 5.8% that quarter and by 5.1% over the first nine months of the year.

PepsiCo (NASDAQ:PEP) is set to release its results later in the session, with the soft drinks giant likely to post a rise in third quarter revenues.

Crude retreats as Middle East conflict continues

Oil prices slipped lower Tuesday, handing back some of the previous session’s sharp gains with traders keeping a wary eye on the conflict in the Middle East and the potential for supply disruptions.

By 03:25 ET, the U.S. crude futures traded 0.8% lower at $85.67 a barrel, while the Brent contract dropped 0.7% to $87.50. 

Both benchmarks surged more than 4% on Monday after Hamas launched the largest military assault on Israel in decades over the weekend, prompting severe retaliation from Israel with a wave of air strikes on Gaza.

Traders fretted that the conflict could escalate, hitting Middle East supply and worsen an expected deficit for the rest of the year.

Additionally, gold futures rose 0.3% to $1,870.55/oz, while EUR/USD traded 0.1% lower at 1.0562.