European markets recovered slightly on Tuesday after several weeks of turbulence and geopolitical unease. Investors pushed major indexes modestly higher as Asian markets advanced and US futures drifted lower.
Milan’s exchange led gains before midday, rising 0.80% on strength from UniCredit, Intesa Sanpaolo, Eni, and Leonardo. These companies powered Italian stocks higher, offsetting broader caution across the continent.
In Germany, defence shares climbed but failed to lift the DAX, which slipped 0.13%. Shipbuilder TKMS extended its strong debut, rising 6.28% after launching on Monday at €60 a share. Rheinmetall added 0.48% in Frankfurt, while BAE Systems in London dipped 0.91%.
Airbus, Thales, and Leonardo confirmed a planned satellite merger, leaving most shares steady except for Leonardo, which jumped 0.56%. London’s FTSE 100 rose 0.22%, supported by banks, energy firms, and utilities. The STOXX 600 and Paris’ CAC 40 stayed mostly flat, with the CAC up 0.13%.
Market Focus Shifts Toward US Policy and Earnings
Russ Mould, investment director at AJ Bell, said, “Wall Street’s strong Monday session lifted optimism in Asia and Europe today.” He added that investors now focus on “US rate cuts, earnings season, and trade discussions with China.”
Gold prices slipped nearly 2% by 11:45 CEST after hitting a record high above $4,390 per ounce. The metal has surged 60% this year as geopolitical tensions and economic uncertainty increased demand for safe-haven assets. HSBC predicts gold could reach $5,000 by 2026 if current trends persist.
Crude oil also traded higher Tuesday morning. The US benchmark rose to $57.62 per barrel, while Brent crude reached $60.99. The euro weakened slightly to $1.1633 from $1.1641.
Asian Gains and US Outlook Steer Investor Mood
Asian stocks extended their rally as Japan’s benchmark index neared 50,000 points following Sanae Takaichi’s election as the country’s first female prime minister. The US dollar climbed to 151.31 yen from 150.75, reflecting expectations that Takaichi will slow interest rate hikes. Economists warned that such a move could keep inflation above Japan’s 2% target.
Hong Kong’s Hang Seng rose 0.65%, and the Shanghai Composite gained 1.36%. Meanwhile, US futures edged lower after Monday’s strong rally.
Traders also reacted to reports that US President Donald Trump may meet Chinese President Xi Jinping later this month at a regional summit. The possible talks raised optimism about easing trade tensions between the world’s two largest economies.
This week, corporate earnings remain in focus. Coca-Cola reports Tuesday, Tesla follows Wednesday, and Procter & Gamble reports Friday. Analysts expect profit growth to justify the S&P 500’s 35% surge since April.
The Federal Reserve continues to weigh rate cuts as it balances inflation risks and a weakening job market. Officials have signaled more reductions, though some warn that further easing could intensify inflation. The US government will release delayed inflation data on Friday, offering crucial insight into September’s price trends — data needed for Social Security adjustments and broader economic decisions.
