European markets showed signs of recovery on Tuesday morning after days of losses and ongoing global uncertainty. Most regional equity indexes opened higher as Asian markets extended gains, even while US futures slipped slightly.
By midday, Milan’s stock exchange led Europe with a 0.80% rise. Strong performances from UniCredit, Intesa Sanpaolo, Eni, and aerospace firm Leonardo pushed the index upward. Defence shares also lifted Germany’s market, though the DAX index still dipped 0.13%.
TKMS, the German shipbuilder, continued to surge after its Frankfurt debut at €60 per share on Monday. The stock gained 6.28% in early trading, while Rheinmetall AG rose 0.48%. In contrast, London’s BAE Systems dropped 0.91%.
European defence and aerospace firms Airbus, Thales, and Leonardo reportedly agreed to merge their satellite divisions. Shares remained mostly steady except for Leonardo, which climbed 0.56%. London’s FTSE 100 rose 0.22%, buoyed by banking and energy shares. Utilities also gained traction. The STOXX 600 index remained nearly flat, while Paris’ CAC 40 added 0.13%.
Russ Mould, investment director at AJ Bell, said, “Wall Street’s strong session on Monday lifted Asia and Europe today.” He added that investors now focus on US interest rate cuts, corporate earnings, and renewed US-China trade talks.
Commodities and Currencies Show Mixed Movements
Gold futures slipped after reaching a record $4,390 an ounce. By 11:45 a.m. CEST, prices fell almost 2%. The metal has risen 60% this year, driven by safe-haven demand amid geopolitical tensions, economic uncertainty, and a weaker US dollar. Analysts at HSBC expect gold prices to reach $5,000 by 2026.
Oil prices edged higher Tuesday morning. West Texas Intermediate traded at $57.62 a barrel, while Brent crude reached $60.99. The euro weakened slightly, falling to $1.1633 from $1.1641.
Across Asia, markets extended gains after Japan’s conservative lawmaker Sanae Takaichi became the country’s first female prime minister. Japan’s benchmark approached the 50,000 mark for the first time, while Hong Kong’s Hang Seng gained 0.65% and Shanghai’s Composite Index rose 1.36%.
The US dollar strengthened to 151.31 yen from 150.75 yen. Analysts warned that Takaichi’s plan to slow Bank of Japan interest rate hikes could keep the yen weak and challenge inflation controls.
Investors Focus on Earnings and US-China Relations
Expectations of a meeting between US President Donald Trump and Chinese President Xi Jinping later this month lifted hopes for improved trade relations. Meanwhile, Chinese Communist Party leaders continue meetings this week to outline a new five-year economic strategy.
Investors also turned attention to corporate earnings. Coca-Cola reports Tuesday, Tesla follows Wednesday, and Procter & Gamble closes the week on Friday. Analysts said companies face pressure to justify recent stock rallies, with the S&P 500 up 35% since April.
Corporate reports now carry added weight as the US government shutdown delays key economic updates. Without new data, the Federal Reserve must gauge inflation and employment trends with limited guidance. Fed officials signaled plans for multiple rate cuts to support growth, though such moves risk worsening inflation.
The US government will release September’s inflation report on Friday. The data will help determine cost-of-living adjustments for Social Security recipients once normal government operations resume. Until then, investors remain cautious but optimistic as global markets test the limits of their recovery.
