European markets climbed on Tuesday morning, recovering after two weeks of weakness and political uncertainty. Most indexes in Europe opened higher as Asian shares extended gains, even while US futures edged lower.
By midday, Milan’s stock exchange led Europe with a 0.80% rise, driven by banks such as UniCredit and Intesa Sanpaolo, energy group Eni, and aerospace giant Leonardo. Defence shares also supported gains in Germany, although the DAX index still slipped 0.13%.
German shipbuilder TKMS, which produces submarines and naval vessels, continued to surge after debuting on Monday at €60 per share. Its stock rose 6.28% by late morning, while Rheinmetall gained 0.48% in Frankfurt. In contrast, BAE Systems in London fell 0.91%.
Airbus, Thales, and Leonardo confirmed a satellite merger, but share reactions stayed muted except for Leonardo, which added 0.56%. London’s FTSE 100 climbed 0.22%, helped by stronger bank and energy stocks, while Paris’ CAC 40 rose 0.13%. The pan-European STOXX 600 traded flat.
Russ Mould, investment director at AJ Bell, said optimism from Wall Street’s rally had “spilled into Asia and Europe.” He noted that traders now focus on possible US rate cuts, corporate earnings, and US-China trade discussions.
Gold Retreats After Record Surge, Oil Prices Edge Higher
Gold prices fell on Tuesday after setting a record above $4,390 per ounce. By 11:45 a.m. CEST, futures dropped nearly 2%. Despite the pullback, gold has soared 60% this year, driven by investor demand for safety amid global instability and a weaker dollar.
HSBC analysts expect gold’s rally to continue through 2026, forecasting prices could hit $5,000 per ounce. Crude oil prices also gained slightly, with US benchmark WTI trading at $57.62 a barrel and Brent crude at $60.99.
The euro slipped to $1.1633 from $1.1641 as investors favored the US dollar.
Asia Rallies and Investors Turn to Global Politics and Profits
Asian stocks rose as Japan’s benchmark neared the symbolic 50,000 mark. Lawmakers elected Sanae Takaichi as Japan’s first female prime minister, lifting investor confidence. The yen weakened to 151.31 per US dollar from 150.75, as markets anticipated Takaichi’s influence over Bank of Japan policy.
Hong Kong’s Hang Seng climbed 0.65%, while Shanghai’s Composite Index gained 1.36%. US stock futures dipped slightly after Monday’s strong rally.
Investor attention also turned to global politics. Markets reacted positively to reports that US President Donald Trump may meet Chinese President Xi Jinping later this month. Analysts said the talks could ease trade tensions between the two largest economies.
Meanwhile, China’s Communist Party leaders began meetings to plan the country’s next five-year economic strategy.
Investors Focus on Earnings, Inflation, and the Fed’s Next Move
This week, investors expect key earnings reports from Coca-Cola on Tuesday, Tesla on Wednesday, and Procter & Gamble on Friday. Analysts say companies must deliver strong profits after a 35% S&P 500 rally since April.
Corporate earnings now serve as a key indicator of US economic strength while the government shutdown delays official reports. The Federal Reserve faces growing pressure to balance rate cuts with inflation control. Officials have signaled multiple rate reductions ahead, but rising prices could complicate those plans.
On Friday, the US government will release delayed inflation data for September, crucial for determining Social Security adjustments. Until the shutdown ends, no further economic data will be published, leaving markets to rely on corporate results and speculation.
