European markets rose slightly on Tuesday, rebounding from recent declines despite ongoing geopolitical uncertainty. Major indexes in Europe opened cautiously higher after Asian shares advanced and U.S. futures dipped.
By midday, Milan’s stock exchange led European gains with a 0.80% increase. Italian banking giants UniCredit and Intesa Sanpaolo, along with energy producer Eni and aerospace firm Leonardo, helped drive the rally.
Germany’s defence sector also lifted sentiment, although the DAX index still slipped 0.13%. Shipbuilder TKMS gained 6.28% in Frankfurt after its IPO debut at €60 per share on Monday. Rheinmetall AG added 0.48%, while London-listed BAE Systems dropped 0.91%.
Airbus, Thales, and Leonardo confirmed plans for a satellite merger. Leonardo’s stock rose 0.56%, while the others traded steady. London’s FTSE 100 climbed 0.22% as banks and energy firms strengthened. Paris’ CAC 40 edged up 0.13%, and the broader STOXX 600 hovered near flat.
“Wall Street rallied Monday, and optimism has carried into Asia and Europe,” said Russ Mould, investment director at AJ Bell. “Attention now turns to U.S. interest rate cuts, earnings reports, and trade talks.”
Commodity Prices Shift as Gold Retreats and Oil Inches Higher
Gold futures fell after the metal hit a record above $4,390 per ounce. By 11:45 CEST, gold slipped nearly 2%. The price has surged 60% since January due to rising safe-haven demand, economic uncertainty, and a weakening U.S. dollar. HSBC analysts expect gold to reach $5,000 in 2026 if geopolitical tensions persist.
Oil prices ticked higher Tuesday morning. U.S. benchmark crude traded at $57.62 a barrel, while Brent crude reached $60.99. The euro eased slightly to $1.1633 from $1.1641.
Asia Gains as Japan Welcomes First Female Prime Minister
Asian stocks extended their rally Tuesday after Japan elected conservative leader Sanae Takaichi as its first female prime minister. Japan’s main index moved closer to the symbolic 50,000 mark.
Hong Kong’s Hang Seng rose 0.65%, and the Shanghai Composite climbed 1.36%. The U.S. dollar strengthened to 151.31 yen from 150.75. Analysts expect a weak yen to continue if Takaichi succeeds in slowing Bank of Japan interest rate hikes.
A weak yen could hinder Japan’s efforts to control inflation, which already exceeds its 2% target.
Investors Eye Trade Talks and Corporate Earnings
Investors expect U.S. President Donald Trump to meet Chinese President Xi Jinping this month during a regional summit, raising hopes for easing trade tensions.
China’s Communist Party leaders are meeting this week to plan the country’s five-year policy roadmap. Meanwhile, investors await key corporate earnings: Coca-Cola reports Tuesday, Tesla on Wednesday, and Procter & Gamble on Friday.
Analysts warn that U.S. firms face growing pressure to justify stock valuations after a 35% rally in the S&P 500 since April. Profit growth will be crucial as delayed economic data from the U.S. government shutdown limits insight into the economy.
The Federal Reserve continues weighing its next moves, balancing inflation risks against a cooling job market. Officials have signaled more rate cuts to boost growth, though lower rates could worsen inflation.
The government will release its long-delayed September inflation report on Friday, a crucial update for Social Security cost-of-living adjustments and for the Fed’s next policy decisions.
