European markets lead advance as stock recover their poise

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An investor watches private stock trading boards at a private stock market gallery in Kuala Lumpur, Malaysia, Monday, Oct. 29, 2018. (AP Photo/Yam G-Jun)

Stock markets recovered their poise Monday with many of Europe's main indexes trading 2 percent higher — but few market participants would go as far as to say that the recent downturn has come to an end.

KEEPING SCORE: In Europe, London's FTSE 100 was up 1.9 percent to 7,074 while Germany's DAX rose 2 percent to 11,427. The CAC 40 in France was 1.1 percent higher at 5,020. Wall Street was poised for a solid open with Dow futures and the broader S&P 500 futures up 1 percent.

MOOD IMPROVES: Despite a big retreat on China's main exchange earlier, the mood in stock markets has certainly improved. The precise catalyst to the firmer tone in Europe was unclear, though the decision by Standard & Poor's not to downgrade its rating of Italy has clearly helped. German markets also appear to have taken in stride the news that Angela Merkel won't run again for German chancellor in 2021.

ANALYST TAKE: "I'm still far from confident that we're through the other side of this particular storm and the coming week could be just as turbulent as the ones that preceded it, but a positive start will come as a relief to investors," said Craig Erlam, senior market analyst at OANDA.

VOLATILTY POSSIBLE: With a week to go until the U.S. midterm elections and a run of key economic data culminating in Friday's U.S. nonfarm payrolls report, there's potential for more volatility. There's also a raft of corporate earnings for traders to digest, with more than a quarter of S&P 500 companies due to report.

BRAZIL ELECTIONS: Reaction to the election of Jair Bolsonaro as the next Brazilian president will also be of interest. The former army captain who cast himself as a political outsider despite a 27-year career in Congress became the latest world leader to rise to power by mixing tough, often violent talk with hard-right positions. His victory reflected widespread anger at the political class after years of corruption, an economy that has struggled to recover after a punishing recession and a surge in violence. Brazil's Bovespa index is set to open strongly while the Brazilian Real has strengthened following the result.

ASIA'S DAY: The Shanghai Composite Index lost 2.2 percent to 2,542.10 and Tokyo's Nikkei 225 sank 0.2 percent to 21,149.80. Seoul's Kospi lost 1.5 percent while Hong Kong's Hang Seng advanced 0.4 percent to 24,812.04.

ENERGY: Benchmark U.S. crude dropped 11 cents to $67.47 per barrel in electronic trading on the New York Mercantile Exchange while Brent crude, used to price international oils, lost 8 cents to trade at $77.57 per barrel in London.

CURRENCY: The euro was down 0.2 percent at $1.1383 while the dollar rose 0.4 percent to 112.33 yen.