European markets regained ground on Tuesday after a week of weakness and political uncertainty. Investors cautiously returned to equities, driving modest gains across major indexes. Asian markets extended their rally, while US futures slipped slightly.
By midday, Milan’s stock exchange led the region with a rise of 0.80%. Italian heavyweights UniCredit, Intesa Sanpaolo, Eni, and defence firm Leonardo lifted the index. In Germany, defence shares supported trading activity, but the DAX still dipped 0.13%.
Shipbuilder TKMS surged again after its Monday IPO, climbing 6.28% to nearly €64 per share. Rheinmetall AG rose 0.48% in Frankfurt, while BAE Systems in London fell 0.91%.
Airbus, Thales, and Leonardo confirmed plans for a satellite joint venture, though most related stocks stayed flat. Leonardo shares gained 0.56%. London’s FTSE 100 advanced 0.22%, helped by energy and banking gains, while utilities saw strong demand. The STOXX 600 held steady, and Paris’ CAC 40 edged up 0.13%.
“Wall Street’s strong Monday session lifted confidence across Asia and Europe,” said Russ Mould, investment director at AJ Bell. “Investors now focus on potential US rate cuts, earnings results, and renewed US-China trade discussions.”
Gold Retreats After Record Highs as Oil Prices Rise
Gold prices eased after hitting a record above $4,390 an ounce earlier in the week. By 11:45 CEST, gold had fallen almost 2%. Despite the dip, the metal’s price remains up 60% this year, driven by safe-haven demand amid global tensions and a weakening US dollar. HSBC expects gold to climb toward $5,000 by 2026.
Crude oil prices edged higher on Tuesday morning. The US benchmark traded at $57.62 a barrel, while Brent crude reached $60.99. The euro slipped slightly to $1.1633 from $1.1641 as traders weighed mixed economic data.
Asian Markets Strengthen as Japan Names First Female Prime Minister
Asian stocks extended gains after Japan appointed Sanae Takaichi as its first female prime minister. Japan’s benchmark index neared the symbolic 50,000 mark for the first time. Hong Kong’s Hang Seng rose 0.65%, and the Shanghai Composite gained 1.36%.
The US dollar strengthened to 151.31 yen from 150.75. Analysts expect Takaichi to pressure the Bank of Japan to slow rate hikes, keeping the yen weak and inflation above the 2% target.
US stock futures slipped slightly following a strong Monday rally. Optimism grew after reports that Presidents Donald Trump and Xi Jinping may meet this month to ease trade tensions.
Investors Focus on Earnings and Inflation Data
Investors are watching corporate earnings closely this week. Coca-Cola reports Tuesday, Tesla on Wednesday, and Procter & Gamble on Friday. The S&P 500 has rallied 35% since April, increasing pressure on companies to deliver profit growth.
The lack of new government data due to the partial US shutdown leaves corporate results as a key indicator of economic strength. The delay complicates the Federal Reserve’s policy decisions as officials debate whether inflation or weak job growth poses the greater risk.
The Fed has signalled additional rate cuts to support the economy, though further easing could worsen inflation. The US government plans to release September inflation figures on Friday, a report the Social Security Administration needs to calculate cost-of-living adjustments.
Until regular government operations resume, officials warned no other data releases will follow. Markets now balance optimism over corporate performance against deep uncertainty over economic direction.
