European markets gained ground on Tuesday morning after several sessions of weakness. Investors cautiously bought back shares despite ongoing geopolitical tension. Most major indexes opened slightly higher as Asian markets extended their gains while US futures drifted lower.
Milan led Europe’s rebound, climbing 0.80% before midday. Banks including UniCredit and Intesa Sanpaolo boosted the rally, joined by energy giant Eni and aerospace leader Leonardo. Germany’s defence sector also rose, though the DAX still slipped 0.13%.
Newly listed shipbuilder TKMS surged 6.28% after debuting in Frankfurt at €60 per share. Rheinmetall AG added 0.48%, while BAE Systems in London dropped 0.91%. Airbus, Thales, and Leonardo confirmed plans for a satellite merger, with Leonardo’s stock up 0.56%.
London’s FTSE 100 advanced 0.22%, driven by banking, energy, and utility gains. Paris’ CAC 40 rose 0.13%, while the pan-European STOXX 600 remained flat.
Analysts Watch Gold and Oil as Markets Shift
AJ Bell’s investment director Russ Mould said, “Wall Street’s strong Monday session lifted Asia and Europe on Tuesday.” He noted that investors now focus on US rate cuts, earnings reports, and upcoming trade talks between Washington and Beijing.
Gold futures retreated after touching a record above $4,390 an ounce. By 11:45 CEST, prices slid 2%. Still, gold has surged 60% since January amid global uncertainty, conflict fears, and a weaker dollar. HSBC expects the rally to continue into 2026, possibly pushing prices toward $5,000 an ounce.
Oil prices edged up during the morning session. US benchmark crude traded at $57.62 per barrel, while Brent stood at $60.99. The euro weakened slightly to $1.1633, down from $1.1641.
Asian Gains and Political Shifts Influence Sentiment
Asian equities advanced after Japan’s ruling party elected conservative lawmaker Sanae Takaichi as the country’s first female prime minister. Japan’s benchmark index neared the symbolic 50,000 level for the first time. Hong Kong’s Hang Seng gained 0.65%, and Shanghai’s Composite rose 1.36%.
The dollar strengthened to 151.31 yen from 150.75. Analysts said Takaichi’s push to slow Bank of Japan rate hikes will likely keep the yen weak, complicating efforts to control inflation above 2%.
In the United States, futures ticked slightly lower after Monday’s rally. Hopes grew for a meeting between Presidents Donald Trump and Xi Jinping later this month, which could ease trade tensions. Investors also tracked corporate earnings from Coca-Cola, Tesla, and Procter & Gamble this week.
Economists warned that the delayed release of US economic data due to the government shutdown makes the Federal Reserve’s decisions harder. Officials must weigh cooling job growth against persistent inflation as they consider more rate cuts. The September inflation report, expected Friday, will heavily influence those decisions.
