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What to Watch: European stocks, Ryanair earnings, Italy's budget

Alanna Petroff
Senior Economics Correspondent at Yahoo Finance UK

Here’s a daily overview of the top business and economic developments the Yahoo Finance UK team is monitoring in the UK, Europe and abroad:

European stocks in focus

European indices are mostly rising on Monday as earning updates continue to roll in and investors await further developments on Brexit negotiations and Italy’s contentious budget.

The Dax index in Germany led the main indices higher with a gain of 0.5% in morning trading.

This comes after Asian markets surged, with the Shanghai Composite rising by 4.1% over the course of the day. Chinese stocks swung higher based on Beijing’s pledge to support the economy and companies.

“Although the positive momentum from Asia has seeped into European markets, gains remain threatened by fragile risk sentiment. With investors bombarded by geopolitical factors such as trade tensions, Italy’s budget woes and Brexit-related uncertainty, caution is set to prevail this week,” warned Lukman Otunuga, research analyst at FXTM.

Ryanair shares lift off

Shares in Ryanair (RY4C.IR) are surging by about 4% on the Irish stock exchange after the airline reported its financial results for the last six months.

Ryanair said on Monday it hopes to conclude its remaining labour issues by Christmas, signalling a possible end to damaging strikes and flight disruptions that have dragged on its shares.

The Irish low-cost carrier reported a 7% drop in profits over the period due to high fuel costs, excess capacity and damage to bookings caused by a wave of strikes.

It also said it may have to cut its capacity further this winter due to high oil costs and intense competition.

Italy-EU clash in the spotlight

Investors are closely monitoring the back-and-forth developments between Italy and the European Union on Monday.

“Italy’s budget woes with the European Union enters a critical phase today as Rome faces a noon deadline to explain why it is in breach of EU fiscal rules,” said Otunuga. “With the Italian government bracing for the EU to reject its 2019 budget on Tuesday, the euro is likely to take a hit. Uncertainty in Italy remains one the major geopolitical factors weighing on global sentiment and denting investor confidence.”

The European Commission sent a warning letter to Rome last week saying the Italian government’s budget appeared to be in “particularly serious non-compliance” with EU rules.

Saudi investors take flight

Foreign investors are getting out of the Saudi stock market, according to a weekly update from the Saudi stock exchange, Tadawul.

“Foreigners were net sellers in the Saudi market last week to the tune of SAR 4.0bn, equivalent to $1.1bn,” said Arqaam Capital research director, Michael Malkoun. “This is the highest level of net foreign selling registered since the Tadawul (stock exchange) began to publish this data in 2015.”

The selling comes after Saudi Arabia on Sunday called the killing of journalist Jamal Khashoggi at its Istanbul consulate a “huge and grave mistake.”

The comments from foreign minister Adel al-Jubeir were some of the most direct yet from Riyadh, which has given multiple and conflicting accounts about Khashoggi’s killing in early October, first denying his death and later admitting it amid an international outcry.

With files from Reuters