European markets rebounded on Tuesday morning after several weeks of weakness and geopolitical tension. Major European indexes opened slightly higher, while Asian markets extended their rallies and US futures dipped modestly.
By midday, Milan’s exchange led European gains, rising 0.80%. Bank stocks like UniCredit and Intesa Sanpaolo advanced, along with energy giant Eni and aerospace firm Leonardo. Their strength helped the Italian market outperform its regional peers.
Defence shares also pushed up Germany’s market, but not enough to lift the DAX, which slipped 0.13%. Ship and submarine manufacturer TKMS surged again after its Frankfurt debut at €60 per share on Monday, gaining 6.28% by late morning. Rheinmetall added 0.48%, while London-based BAE Systems fell 0.91%.
Defence and Energy Firms Drive Regional Movement
Airbus, Thales, and Leonardo agreed to merge their satellite operations, boosting investor interest. Leonardo’s shares rose 0.56%, while Airbus and Thales remained steady. The FTSE 100 in London climbed 0.22%, supported by higher bank and energy stock prices. Utilities also attracted buyers.
Across Europe, other key indexes showed mixed movement. The STOXX 600 hovered near flat levels, while Paris’ CAC 40 gained a modest 0.13%. Russ Mould, investment director at AJ Bell, noted, “Wall Street’s strong performance on Monday has lifted sentiment in Asia and Europe today.” He said markets now focus on potential US interest rate cuts, the start of corporate earnings season, and renewed US-China trade discussions.
Gold prices slipped after breaking above $4,390 an ounce, setting a new record before retreating 2% by 11:45 CEST. Despite the dip, gold remains up 60% since January, driven by safe-haven demand, global uncertainty, and a weaker US dollar. HSBC projects gold could hit $5,000 by 2026.
Crude oil prices ticked slightly higher. West Texas Intermediate traded at $57.62 per barrel, while Brent crude stood at $60.99. The euro eased to $1.1633 from $1.1641.
Global Markets React to Political and Economic Shifts
Asian markets extended their gains after Japan’s lawmakers selected Sanae Takaichi as the country’s first female prime minister. Japan’s main index approached the 50,000 mark for the first time, while the yen weakened to 151.31 against the US dollar. Hong Kong’s Hang Seng rose 0.65%, and Shanghai’s Composite Index climbed 1.36%.
Analysts said Takaichi’s stance on slowing interest rate hikes could keep the yen weak and complicate inflation control efforts.
Meanwhile, US futures slipped after Monday’s rally. Investors anticipate a potential meeting between US President Donald Trump and Chinese President Xi Jinping later this month, hoping for progress in trade relations.
This week’s corporate earnings reports — from Coca-Cola, Tesla, and Procter & Gamble — will test whether the rally in US equities can hold. The S&P 500 has climbed 35% since April, heightening pressure on companies to deliver solid profits.
With US government data delayed by the shutdown, earnings reports now serve as key indicators of economic strength. The Federal Reserve faces growing uncertainty over inflation and employment trends as it prepares further rate cuts.
Officials expect to lower rates again to support growth, though some warn that easier policy could worsen inflation. On Friday, the government plans to release delayed inflation data for September, which the Social Security Administration needs to calculate benefit adjustments. Until normal operations resume, no additional reports will follow.
