European stocks rose slightly on Tuesday morning as traders reacted to geopolitical uncertainty and global economic signals. Most European equity indexes opened higher, following gains in Asia and minor losses in US futures.
By midday, Milan led the region with a 0.80% increase, supported by UniCredit, Intesa Sanpaolo, Eni, and aerospace giant Leonardo. Defence shares helped Germany recover modestly, though the DAX index still dipped 0.13%.
German shipbuilder TKMS climbed 6.28% in Frankfurt after debuting Monday at €60 per share. Rheinmetall also gained 0.48%, while London-based BAE Systems slipped 0.91%.
European defence firms Airbus, Thales, and Leonardo agreed to merge satellite operations. Their share prices held steady, except for Leonardo, which advanced 0.56%.
The FTSE 100 rose 0.22%, buoyed by banking, energy, and utility stocks. Paris’ CAC 40 added 0.13%, and the STOXX 600 traded nearly flat.
“Wall Street’s strong Monday carried momentum into Asia and Europe,” said Russ Mould, AJ Bell’s investment director. “Attention now shifts to US rate cuts, earnings reports, and China trade discussions.”
Commodities Shift as Gold Retreats and Oil Gains
Gold prices fell after hitting a record above $4,390 per ounce. By 11:45 CEST, the metal slid 2%. Despite the dip, gold remains up 60% this year due to geopolitical fears, inflation worries, and a weaker US dollar.
HSBC projected continued gains through 2026, with prices possibly reaching $5,000 per ounce.
Crude oil prices edged higher Tuesday morning. US benchmark crude traded at $57.62 per barrel, while Brent reached $60.99. The euro weakened slightly to $1.1633 from $1.1641.
Asia and the US Show Mixed Signals
Asian markets advanced after Japan’s ruling party selected Sanae Takaichi as the country’s first female prime minister. Japan’s benchmark approached the 50,000 mark for the first time, while 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 yen. Analysts expect the yen to stay weak if Takaichi slows interest rate hikes, complicating Japan’s efforts to control inflation above its 2% target.
US stock futures slipped slightly following Monday’s strong rally. Investors await signs of progress in upcoming US-China trade talks, as President Donald Trump and President Xi Jinping may meet later this month.
Earnings Season and Policy Outlook Guide Markets
Investors turned their focus to corporate results as major companies report this week. Coca-Cola posts earnings Tuesday, Tesla follows Wednesday, and Procter & Gamble closes the week Friday.
Companies face pressure to prove profit growth after the S&P 500 surged 35% since April. Analysts view these reports as vital indicators of economic strength, given the US government shutdown has delayed key data releases.
Federal Reserve officials remain divided over the next rate cuts. They plan multiple reductions to support growth, but risk fuelling inflation.
The US government will release September’s inflation data Friday. The report, delayed by the shutdown, will determine Social Security’s cost-of-living adjustments and shape upcoming Fed decisions.
