European stocks rebounded on Tuesday morning as investors cautiously returned after recent weakness. Equity indexes across the continent opened higher while Asian markets continued to advance and U.S. futures slipped slightly.
By midday, Milan’s stock market led gains, rising 0.80%. UniCredit, Intesa Sanpaolo, energy giant Eni, and defence firm Leonardo all strengthened. German defence shares also rose, but the DAX index still dipped 0.13%.
TKMS, the German shipbuilder that went public Monday, jumped 6.28% on its second day of trading in Frankfurt after debuting at €60 per share. Rheinmetall AG rose 0.48%, while BAE Systems in London dropped 0.91%.
European defence companies Airbus, Thales, and Leonardo agreed to merge their satellite operations, though share prices stayed mostly stable. Leonardo’s stock climbed 0.56%. In London, the FTSE 100 added 0.22%, helped by bank and energy shares. Paris’ CAC 40 advanced 0.13%, and the STOXX 600 remained nearly unchanged.
Russ Mould, investment director at AJ Bell, said, “Wall Street’s strong Monday session boosted optimism in Asia and Europe. The attention now shifts to U.S. rate cuts, earnings season, and trade talks with China.”
Gold Retreats as Oil and Dollar Hold Firm
Gold prices fell after touching a record above $4,390 an ounce. By 11:45 CEST, futures slipped almost 2%. The metal’s value has surged 60% this year as investors sought safety amid geopolitical instability, a weaker dollar, and persistent economic uncertainty. HSBC expects the rally to continue into 2026, projecting a potential peak near $5,000.
Crude oil prices edged higher Tuesday morning. The U.S. benchmark traded at $57.62 per barrel, while Brent crude stood at $60.99. The euro weakened slightly to $1.1633 from $1.1641.
Asia Gains Momentum as Japan Names New Leader
Asian markets climbed further after Japan elected Sanae Takaichi as its first female prime minister. Japan’s main index moved closer to the symbolic 50,000 mark for the first time.
The U.S. dollar strengthened to 151.31 yen from 150.75. Analysts warned that Takaichi’s push to slow rate hikes could keep the yen weak, complicating Japan’s efforts to contain inflation above its 2% target.
Hong Kong’s Hang Seng index rose 0.65%, while the Shanghai Composite gained 1.36%. U.S. stock futures dipped slightly after Monday’s rally.
Investors Watch Earnings and U.S.-China Developments
Investor sentiment improved as markets anticipated a possible meeting between U.S. President Donald Trump and Chinese President Xi Jinping later this month. Hopes grew for progress in trade relations between the world’s two largest economies.
In China, Communist Party leaders met to draft a five-year economic plan. Meanwhile, investors awaited major earnings reports from Coca-Cola on Tuesday, Tesla on Wednesday, and Procter & Gamble on Friday.
Wall Street expects companies to justify the S&P 500’s 35% rise since April with strong profits. The delayed release of U.S. economic data due to the government shutdown has left corporate earnings as the main gauge of economic health.
The Federal Reserve faces renewed pressure as it weighs interest rate cuts to support growth without reigniting inflation. Officials signaled more cuts ahead, though excessive easing could worsen price pressures.
On Friday, the U.S. government will finally issue its long-awaited September inflation update. The data will help determine cost-of-living adjustments for Social Security recipients once federal reporting resumes.
