European markets staged a cautious recovery on Tuesday after weeks of weakness. Major indexes opened slightly higher as Asian markets climbed and US futures slipped.
By midday, Milan led the region with a 0.80% rise, driven by strong performances from UniCredit, Intesa Sanpaolo, energy giant Eni, and defence firm Leonardo. Germany’s defence sector also gained, though the DAX slipped 0.13%.
Shipbuilder TKMS outperformed again after debuting on Monday in Frankfurt at €60 per share. By Tuesday morning, its stock rose 6.28%. Rheinmetall gained 0.48%, while London’s BAE Systems fell 0.91%.
European defence giants Airbus, Thales, and Leonardo confirmed plans for a satellite merger. Leonardo’s shares gained 0.56%, while others stayed flat. London’s FTSE 100 climbed 0.22%, lifted by banking and energy stocks. Utilities also gained ground. Paris’ CAC 40 added 0.13%, and the pan-European STOXX 600 remained nearly unchanged.
“Wall Street had a strong Monday, and optimism spread to Asia and Europe,” said Russ Mould, investment director at AJ Bell. He noted that investors are now focused on US rate cuts, the new corporate reporting season, and trade talks between Washington and Beijing.
Gold Retreats After Record Surge
Gold futures slipped nearly 2% by 11.45 CEST after hitting a record above $4,390 per ounce. The price has soared 60% this year due to safe-haven demand amid global tensions, economic uncertainty, and a weakening US dollar.
HSBC forecasted that gold could reach $5,000 by 2026 as investors continue to seek stability.
Oil prices rose slightly, with the US benchmark at $57.62 a barrel and Brent crude trading at $60.99. The euro eased to $1.1633 from $1.1641.
Asian Gains and Global Investor Focus
Asian markets extended gains after Japan elected conservative lawmaker Sanae Takaichi as its first female prime minister. Japan’s benchmark index edged toward the symbolic 50,000 mark for the first time.
The US dollar strengthened to 151.31 yen from 150.75. Analysts warned that if Takaichi slows the Bank of Japan’s rate hikes, the yen will likely stay weak, complicating efforts to manage inflation above its 2% target.
Hong Kong’s Hang Seng gained 0.65%, and the Shanghai Composite rose 1.36%. US stock futures slipped slightly after another rally Monday.
Investors Watch Corporate Earnings and Policy Shifts
Markets reacted to expectations that US President Donald Trump will meet Chinese President Xi Jinping later this month. Investors hope the talks will ease trade tensions between the two largest economies.
In China, Communist Party leaders are meeting to outline a new five-year policy plan. Meanwhile, investors await key earnings reports — Coca-Cola on Tuesday, Tesla on Wednesday, and Procter & Gamble on Friday.
The S&P 500’s 35% rally since April has raised concerns that valuations have outpaced earnings. Companies now face pressure to prove profit growth amid economic uncertainty and a US government shutdown that delayed official data releases.
The Federal Reserve must balance slowing job growth with persistent inflation. Officials signaled additional rate cuts to boost the economy, but such moves could reignite price pressures.
The US government plans to release September’s inflation report on Friday — a key figure needed for Social Security’s cost-of-living adjustments. Other economic updates remain paused until federal operations resume.
