SAP sets the tone

A look at the day ahead in European and global markets from Vidya Ranganathan

Europe's heavyweight software maker SAP reports third-quarter earnings today. The behemoth will set the tone for German and wider stock markets, since it comprises 15% of Deutsche Boerse's DAX index with a 261 billion euro ($284 billion) market value.

SAP's cloud and business-planning software businesses have been doing well this year and driven its share price up 53%. That's key context, given how stock markets have been whipsawed in the past week by a string of reports from big U.S. banks and chipmakers such as ASML.

It's unlikely Monday's earnings report will produce any new information on another long-running issue for SAP: a probe by U.S. prosecutors into the firm and its contractors for potential price-fixing in government contracts.

Broader markets are meanwhile counting down to the Nov. 5 U.S. presidential election, and putting on trades aligned with opinion polls that show odds improving for former President Donald Trump over Vice President Kamala Harris.

China's steady rollout of stimulus measures has also helped sentiment, the latest being a quarter point lending rate cut on Monday.

Bitcoin hit a three-month high and has risen 18% since Oct. 10 on Trump's improving prospects, since his administration would be seen as taking a softer line on cryptocurrency regulation.

The dollar has been rising, too, driven by the view that Trump's proposed tariff and tax policies could keep U.S. interest rates high and undermine the currencies of its trading partners.

Analysts say rising U.S. real rates are driving the dollar up. But more so is the fact that interest rates elsewhere are falling fast, giving the dollar a yield advantage.

The euro is down more than 3% in three weeks and has fallen through its 200-day moving average. It is now parked near a 2-1/2 month low.

The closely watched gap between U.S. and German 10-year bond yields has widened to around 189 basis points (bps) as U.S. yields have climbed in recent weeks while the German ones have declined.

Key developments that could influence markets on Monday:

Data: German producer prices inflation, UK house prices

Speakers/events: Fed's Lorie Logan, Neel Kashkari, Jeffrey Schmid, and Mary Daly; ECB's Gediminas Simkus; World financial leaders gather for the IMF-World Bank Annual Meetings.

Earnings: SAP SE, Unipol Gruppo, Bollore SE, Sandvik AB, Nucor Corp

($1 = 0.9203 euros)

(By Vidya Ranganathan; Editing by Edmund Klamann)