European markets regained ground on Tuesday morning as investors cautiously returned after weeks of volatility. Most regional indexes opened slightly higher, mirroring gains in Asia, while US futures dipped modestly.
Milan’s stock exchange led the recovery, climbing 0.80% by midday. Banks including UniCredit and Intesa Sanpaolo boosted gains, alongside energy giant Eni and aerospace company Leonardo. In Germany, defence stocks helped ease losses, although the DAX still slipped 0.13%.
German shipbuilder TKMS surged after its Frankfurt debut at €60 per share on Monday. The company’s stock rose another 6.28% by midmorning. Rheinmetall AG advanced 0.48%, while BAE Systems in London declined 0.91%.
European defence and aerospace firms Airbus, Thales, and Leonardo reportedly agreed to a satellite merger. Leonardo shares rose 0.56%, while others remained flat. London’s FTSE 100 added 0.22%, supported by strong banking and energy sectors. Paris’ CAC 40 gained 0.13%, and the STOXX 600 index stayed nearly unchanged.
“Wall Street’s strong Monday session lifted confidence across Asia and Europe,” said Russ Mould, investment director at AJ Bell. “Investors are focusing on US rate cuts, earnings reports, and US-China trade talks.”
Gold Retreats as Oil Climbs
Gold prices fell after touching a record high above $4,390 per ounce earlier this week. By 11:45 CEST, futures dropped nearly 2%. Analysts attributed the pullback to profit-taking after months of rallying.
Gold has risen 60% since January due to demand for safe-haven assets, fueled by global instability and a weaker US dollar. HSBC expects prices to continue climbing through 2026, potentially reaching $5,000 per ounce.
Crude oil prices edged up on Tuesday morning. US benchmark West Texas Intermediate traded at $57.62 per barrel, while Brent crude stood at $60.99. The euro weakened slightly to $1.1633 from $1.1641.
Asian Gains and US Outlook
Asian markets extended their winning streak after Japan’s lawmakers elected conservative Sanae Takaichi as the nation’s first female prime minister. Tokyo’s benchmark index neared the 50,000 mark, while Hong Kong’s Hang Seng rose 0.65% and Shanghai’s Composite climbed 1.36%.
The yen fell to 151.31 per dollar from 150.75. Analysts said Takaichi’s push to slow interest rate hikes could keep the yen weak, complicating efforts to tame inflation.
US futures traded slightly lower after Monday’s rally. Investors remained hopeful as reports suggested US President Donald Trump and Chinese President Xi Jinping might meet this month to ease trade tensions.
Corporate Reports and Policy Watch
Traders are watching major corporate earnings this week, including Coca-Cola on Tuesday, Tesla on Wednesday, and Procter & Gamble on Friday. Companies face pressure to deliver solid profits after the S&P 500 jumped 35% from its April lows.
Corporate reports now carry extra weight because the US government shutdown delayed key economic data. The Federal Reserve faces a tougher task balancing high inflation with a slowing labor market. Fed officials signaled more rate cuts, though analysts warned this could worsen inflation.
On Friday, the US government plans to release delayed inflation data for September. The figures will guide cost-of-living adjustments for Social Security recipients once regular government operations resume.
