European stock markets opened with modest gains on Tuesday, attempting to build on the previous session’s rally, though an undercurrent of caution persisted as investors shifted their focus from initial trade relief to a heavy slate of corporate earnings and key economic data releases.
The 90-day pause in the US-China tariff spat provided some comfort, but questions about the longer-term trade outlook lingered.
The pan-European Stoxx 600 index edged up 0.26% by 8:15 a.m. London time.
Early trading saw the UK’s FTSE 100 rise 0.12%, France’s CAC 40 gain 0.06%, and Germany’s DAX advance 0.16%.
Slightly different early figures from IG data at 03:02 ET showed DAX +0.2%, CAC 40 -0.1%, FTSE 100 -0.2%.
This followed a strong global market rally on Monday, sparked by the news that Washington and Beijing had agreed to slash steep tariffs for a 90-day period.
The development raised hopes that a more damaging, full-blown trade war between the world’s two largest economies might be averted, at least temporarily.
However, after the initial euphoria, a more pessimistic tone emerged from Asia-Pacific markets overnight, setting a somewhat more subdued stage for European trading as questions arose about what might transpire after the 90-day tariff pause concludes.
Meanwhile, US stock futures were also pointing lower in overnight trading as investors awaited fresh US inflation data and upcoming producer price index figures.
Economic data and earnings deluge in focus
With the immediate trade news digested, attention in Europe is now turning back to “more mundane matters,” namely the state of the regional economy and corporate financial performance.
On the data front, figures released earlier Tuesday showed a further cooling in Britain’s jobs market.
Employment fell, wage growth moderated, and the unemployment rate rose to 4.5% in the three months to March (up from 4.4%).
Later in the session, the release of Germany’s ZEW survey of economic sentiment will be closely watched; the index is expected to rebound after tariff concerns previously sent morale to its lowest point since the start of the Ukraine war.
Looking further ahead, crucial Q1 GDP data for the Eurozone as a whole, along with inflation figures from key European countries, are due later in the week.
These will provide vital insights as the European Central Bank (ECB) considers its next policy moves.
The ECB has already cut interest rates seven times in the past year due to retreating inflation, and policymakers are reportedly laying the groundwork for another potential cut in early June.
A heavy schedule of corporate earnings is also on tap. Investors will be scrutinizing results from a diverse range of major companies, including SoftBank, Tata Motors, Nissan, Honda, Metro Bank, and German healthcare and agricultural giant Bayer.
Bayer confirmed its full-year forecast for 2025 despite a sharp decline in Q1 profit, noting that strength in its pharmaceuticals and consumer health units helped offset weakness in its crop science division.
The pharmaceutical sector generally remains sensitive to potential US policy shifts, particularly after President Trump recently railed against high US drug prices in a social media post.
Elsewhere, German engineering firm Duerr (ETR:DUEG) reported a notable improvement in earnings despite a sharp drop in Q1 order intake.
Oil steadies near highs
In commodity markets, oil prices steadied on Tuesday near a two-week high, as traders digested the US-China trade deal announcement.
Brent futures gained 0.1% to $65.02 a barrel, and US WTI crude rose 0.2% to $62.04.
Both contracts had surged about 1.5% on Monday, adding to the previous week’s gains and reaching their highest settlements since April 28.
While the 90-day tariff suspension offers some relief, underlying uncertainties about the US trade deficit with China and the long-term nature of any resolution persist.
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