European markets recovered on Tuesday after recent weakness, despite ongoing geopolitical tension. Investors cautiously bought shares as major indexes opened higher. Asian markets extended gains, while U.S. futures slipped slightly.
Milan’s stock exchange led the region, rising 0.80% before midday. Gains from UniCredit, Intesa Sanpaolo, energy giant Eni, and defence firm Leonardo drove the uptick. Germany’s defence stocks also advanced, although the DAX index dipped 0.13%.
German shipbuilder TKMS surged 6.28% in Frankfurt after debuting at €60 per share on Monday. Rheinmetall AG added 0.48%, while BAE Systems in London lost 0.91%.
Airbus, Thales, and Leonardo confirmed a satellite merger, though share prices remained stable. Leonardo’s stock rose 0.56%. London’s FTSE 100 gained 0.22%, supported by strong energy and bank shares, while utilities saw increased demand. Paris’ CAC 40 climbed 0.13%, and the broader STOXX 600 stayed nearly flat.
Analysts Watch U.S. Interest Rates and Gold Pullback
Russ Mould, investment director at AJ Bell, said optimism from Wall Street spread to Asia and Europe. “The focus now turns to U.S. rate cuts, the corporate earnings season, and U.S.-China trade talks,” he said.
Gold prices retreated nearly 2% by 11.45 CEST after reaching a record $4,390 per ounce. The metal has climbed 60% since January, fuelled by safe-haven demand amid global instability and a weaker U.S. dollar. HSBC predicted gold could reach $5,000 by 2026 if the rally continues.
Crude oil prices inched higher. West Texas Intermediate traded at $57.62 a barrel, and Brent crude reached $60.99. The euro slipped slightly to $1.1633 from $1.1641.
Asia Gains as Japan Names New Prime Minister
Asian markets rallied as Japan’s benchmark neared the 50,000 mark for the first time. Lawmakers elected conservative hardliner Sanae Takaichi as Japan’s first female prime minister. Investors expect her to slow the Bank of Japan’s rate increases, likely keeping the yen weak against the dollar. The U.S. dollar climbed to 151.31 yen from 150.75.
Hong Kong’s Hang Seng gained 0.65%, and Shanghai’s Composite Index rose 1.36%. U.S. stock futures edged lower after Monday’s rally.
Investors turned their attention to potential trade talks between Presidents Donald Trump and Xi Jinping, expected later this month. Hopes for reduced trade tensions lifted sentiment.
This week, Coca-Cola, Tesla, and Procter & Gamble will release earnings. Analysts expect companies to prove profit growth after a 35% S&P 500 rally since April. Corporate earnings now serve as key indicators of U.S. economic strength, especially as the government shutdown delays official reports.
The Federal Reserve faces renewed pressure to balance inflation control with economic slowdown. Officials signalled more rate cuts ahead, though some warn that could worsen inflation. The U.S. government plans to release delayed September inflation data on Friday, which the Social Security Administration needs for cost-of-living adjustments.
Until government operations resume, no further data updates will be issued — leaving investors to rely on corporate results and global signals for direction.
