European markets staged a cautious rebound on Tuesday morning after recent volatility and geopolitical tensions. Most major European indexes opened higher as Asian markets extended gains while U.S. futures slipped slightly.
By midday, Milan’s stock exchange led with a 0.80% rise, driven by strong performances from UniCredit, Intesa Sanpaolo, energy group Eni, and defence manufacturer Leonardo. German defence stocks also lifted sentiment, though the DAX still dipped 0.13%. Shipbuilder TKMS continued its post-IPO surge, rising 6.28% in Frankfurt after debuting at €60 per share. Rheinmetall AG gained 0.48%, while London’s BAE Systems slipped 0.91%.
Airbus, Thales, and Leonardo agreed to a satellite merger, keeping shares steady except for Leonardo’s 0.56% rise. The FTSE 100 added 0.22% on gains in banking, energy, and utilities. Paris’ CAC 40 inched up 0.13%, and the STOXX 600 remained nearly flat.
Russ Mould, investment director at AJ Bell, said optimism carried over from Wall Street’s rally. “Investors now focus on U.S. rate cuts, the new earnings season, and U.S.-China trade talks,” he noted.
Commodity Prices Shift as Investors Rebalance
Gold prices fell after reaching a record $4,390 an ounce. By 11:45 CEST, the metal’s value slid almost 2%. Despite the dip, gold has surged 60% this year as investors seek safe assets amid economic uncertainty and a weakening U.S. dollar. HSBC predicts prices could climb to $5,000 by 2026.
Oil prices rose modestly. The U.S. benchmark traded at $57.62 per barrel, and Brent crude reached $60.99. The euro eased slightly to $1.1633 from $1.1641.
Asian markets also advanced. Japan’s benchmark index neared the 50,000 mark after lawmakers chose conservative Sanae Takaichi as the country’s first female prime minister. The yen weakened to 151.31 per U.S. dollar from 150.75. Analysts expect continued yen weakness if the Bank of Japan slows interest rate hikes. Hong Kong’s Hang Seng added 0.65%, while Shanghai’s Composite index climbed 1.36%.
Global Investors Watch Trade Talks and Earnings Reports
Investors turned attention to expectations that U.S. President Donald Trump will meet Chinese President Xi Jinping at a regional summit later this month. The potential talks renewed hopes of easing trade tensions between the world’s two largest economies.
Meanwhile, Chinese Communist Party leaders began meetings this week to draft a new five-year economic plan. In the U.S., markets await major corporate results — Coca-Cola on Tuesday, Tesla on Wednesday, and Procter & Gamble on Friday.
Companies now face pressure to show stronger profits after a 35% surge in the S&P 500 since April. Corporate results will also help gauge the strength of the U.S. economy as the government shutdown delays key data releases.
The Federal Reserve continues weighing inflation risks against a weakening job market. Officials signaled more rate cuts to stimulate growth, though further easing could reignite inflation. On Friday, the U.S. government will release September’s inflation update, delayed earlier this month. The Social Security Administration will use the data to set cost-of-living adjustments, though other reports remain on hold until the government resumes full operations.
