European markets opened higher on Tuesday, reversing last week’s weakness. Traders cautiously reentered positions despite continuing geopolitical tensions. Most major indexes rose modestly after Asia extended gains and U.S. futures slipped slightly.
By midday, Milan led the rally, climbing 0.80%. Banks such as UniCredit and Intesa Sanpaolo, along with energy giant Eni and aerospace firm Leonardo, pushed the index higher. German defence shares also advanced, though the DAX still dipped 0.13%.
Battleship and submarine manufacturer TKMS, which debuted in Frankfurt on Monday at €60 a share, surged 6.28%. Rheinmetall AG gained 0.48% in Frankfurt, while BAE Systems in London slipped 0.91%.
Airbus, Thales, and Leonardo confirmed a satellite merger deal, but only Leonardo’s shares moved significantly, rising 0.56%. The FTSE 100 in London edged up 0.22%, supported by banks, energy firms, and utilities. Paris’ CAC 40 added 0.13%, while the STOXX 600 stayed nearly flat.
“Optimism from Wall Street’s strong Monday session carried into Asia and Europe,” said Russ Mould, investment director at AJ Bell. “Traders now focus on U.S. rate cuts, corporate earnings, and trade talks with China.”
Commodities and Currencies Show Sharp Swings
Gold prices dropped nearly 2% by 11:45 CEST after reaching a record $4,390 an ounce. The metal has climbed 60% this year, driven by safe-haven demand amid global instability and a weakening U.S. dollar. Analysts at HSBC expect gold to reach $5,000 by 2026.
Oil prices inched higher during morning trading. U.S. benchmark crude sold at $57.62 a barrel, while Brent crude traded at $60.99. The euro weakened slightly to $1.1633 from $1.1641.
Asia Gains as Japan Names First Female Prime Minister
Asian markets advanced as Japan’s lawmakers elected Sanae Takaichi, the country’s first female prime minister. Investors expect her to slow Bank of Japan interest rate hikes, which could keep the yen weak against the dollar.
The dollar rose to 151.31 yen from 150.75 yen. The yen’s weakness could complicate Japan’s inflation control, which already exceeds the 2% target. Japan’s benchmark index neared the 50,000 mark for the first time. Hong Kong’s Hang Seng climbed 0.65%, and Shanghai’s Composite rose 1.36%.
Investors Eye Trade Talks and Corporate Results
Investor optimism grew after reports that U.S. President Donald Trump and Chinese President Xi Jinping might meet later this month. The potential talks renewed hopes for easing trade tensions between the world’s largest economies.
Chinese Communist Party leaders are setting their next five-year economic plan this week. Meanwhile, investors are tracking corporate earnings — Coca-Cola reports Tuesday, Tesla Wednesday, and Procter & Gamble Friday.
The S&P 500 has surged 35% since April, heightening pressure on companies to show genuine profit growth. Earnings have gained importance as the ongoing U.S. government shutdown delays key economic reports.
Federal Reserve officials face a tough balancing act between inflation and slowing employment. They plan further rate cuts to support growth but risk inflaming inflation. The government’s September inflation report, expected Friday, will be crucial. The Social Security Administration needs the data to calculate benefit adjustments. Until federal services resume, no other reports will be released.
