European markets opened higher on Tuesday, showing tentative recovery after recent weakness. Most equity indexes in Europe gained modestly during morning trading, supported by positive sentiment from Asia, even as US futures dipped slightly.
By midday, Milan’s stock exchange led European gains, climbing 0.80%. Bank shares, including UniCredit and Intesa Sanpaolo, helped lift the index, along with energy group Eni and aerospace giant Leonardo.
Defence stocks boosted Germany’s market as well, although not enough to move the DAX out of its 0.13% decline. German shipbuilder TKMS, which launched its IPO in Frankfurt on Monday, rose 6.28% from its debut price of €60 per share. Rheinmetall AG added 0.48%, while BAE Systems in London slipped 0.91%.
In the UK, the FTSE 100 edged up 0.22%, lifted by bank and energy shares. Utilities also saw steady demand. Across Europe, the benchmark STOXX 600 traded nearly flat, and France’s CAC 40 rose 0.13% by midday.
Defence Firms and Commodities Dominate Market Moves
European aerospace leaders Airbus, Thales, and Leonardo confirmed plans for a satellite merger. Leonardo’s shares rose 0.56%, while others remained stable. Analysts said the merger could reshape Europe’s defence technology sector.
AJ Bell’s investment director Russ Mould noted that “Wall Street’s strong session on Monday extended optimism into Asia and Europe.” He added that investors now focus on US interest rate decisions, corporate earnings, and progress in US-China trade negotiations.
Gold futures retreated nearly 2% by 11.45 CEST after reaching a record above $4,390 an ounce. Prices have surged 60% this year, driven by safe-haven demand, economic worries, and a weaker US dollar. HSBC forecasts gold may hit $5,000 by 2026 if global tensions persist.
Crude oil prices edged higher, with US benchmark crude trading at $57.62 a barrel and Brent crude at $60.99. The euro weakened slightly to $1.1633 from $1.1641.
Asia Strengthens as Takaichi Wins and Investors Eye US-China Talks
Asian markets extended Monday’s momentum after Japanese lawmakers chose Sanae Takaichi as Japan’s first female prime minister. Japan’s benchmark index inched closer to the key 50,000 level. The US dollar strengthened to 151.31 yen, up from 150.75, as expectations grew that Japan would slow rate hikes — a move likely to keep the yen weak and inflation above target.
Hong Kong’s Hang Seng gained 0.65%, while the Shanghai Composite climbed 1.36%.
Investors continued to focus on geopolitical developments. Anticipation that US President Donald Trump will meet Chinese President Xi Jinping later this month fueled hopes for a thaw in trade relations. Meanwhile, China’s Communist Party leaders began setting their next five-year economic strategy.
This week’s earnings lineup includes Coca-Cola on Tuesday, Tesla on Wednesday, and Procter & Gamble on Friday. Analysts expect strong results after a 35% surge in the S&P 500 since April. Corporate performance will also serve as a key indicator of the US economy’s resilience amid delayed government reports caused by the shutdown.
The Federal Reserve faces mounting pressure to balance inflation risks with a slowing job market. Officials have hinted at further rate cuts to support growth, though economists warn that easy money could reignite inflation. The government’s delayed September inflation report, expected Friday, remains critical for future policy moves and for Social Security’s cost-of-living adjustments.
Markets, for now, remain steady — holding their breath for clarity on trade, inflation, and earnings before the next big move.
