Stock markets around the world displayed renewed optimism on Tuesday, building on the previous U.S. rally and carrying momentum into Europe and Asia. This rebound spans all sectors, from conventional utilities to soaring meme stocks, as global investors assess the complexities of trade turmoil, central bank policies, and corporate earnings.
Major U.S. indexes rose more than 1 percent on Tuesday, breaking multi-session losing streaks after late-week volatility tied to President Trump’s new tariff announcements, a disappointing jobs report, and his sudden dismissal of the head of the Bureau of Labor Statistics. Market participants increased their bets on a U.S. Federal Reserve rate cut in September, propelling the Dow industrials up by 585 points, or 1.3 percent. The Dow Industrials is presently trading above $44,173.63. Trump indicated he would nominate successors this week for both BLS Commissioner Erika McEntarfer and outgoing Fed governor Adriana Kugler, moves that could significantly influence the central bank’s policy approach.
European markets reflect positive sentiment
Europe’s stock markets echoed this positive sentiment as well. The Eurozone’s primary benchmark, the EU50, climbed to 5,254.8, a gain of 1.5 percent from the previous session and up nearly 15 percent year-over-year, although still below its March peak. The EU50 is currently trading above $5,242.90. Banking and insurance stocks outperformed, while industrial giants recouped some losses from last week. However, Swiss stocks lagged due to new U.S. tariffs on Swiss goods. Switzerland announced its readiness to offer a more appealing proposal to the U.S., while the European Union stated it would pause for six months the retaliatory tariffs it had prepared. The STOXX 600 index increased by 0.8 percent to 540 (currently trading at $540.60), with British banks leading the way. Germany’s DAX and France’s CAC 40 also saw significant gains, reflecting optimism for a negotiated resolution to the latest round of global trade conflicts, with the DAX trading above $23,757.65 and the CAC trading above $7,632.
Mixed performance in Asian markets
In contrast, Asian markets experienced a more mixed session, marked by ongoing volatility and sector-specific divergences. Japan’s Nikkei 225 index fell by 2.05 percent on Tuesday (currently trading at $40,567.50), while South Korea’s Kospi edged up by 0.13 percent (trading at $3,195.40), and Hong Kong’s Hang Seng futures indicated a weaker opening after a prior close of 24,507.81 (currently trading at $24,832.0). Additionally, Australia’s S&P/ASX200 slightly dipped by 0.21 percent, now trading at $8,763.70. Regional risk appetite remains sensitive to U.S. tariff developments and fluctuating interest rate expectations, but select Asian indices, such as the MSCI China Index and Hang Seng, still recorded month-on-month gains in July—rising 4.5 percent and 2.9 percent respectively. A recent 90-day China-U.S. tariff truce provided tactical support to China’s IT and healthcare stocks, sparking a policy-driven rally in those sectors. Investors are becoming increasingly selective amid sharp movements in currency, commodity, and equity markets, positioning themselves in areas with both policy tailwinds and robust fundamentals.
Earnings season continues to be a key driver, with more than two-thirds of S&P 500 companies having reported their quarterly results and over 80 percent exceeding earnings-per-share expectations, according to FactSet. The week features high-profile reports, including Palantir on Monday, and McDonald’s, Disney, and Uber later this week.
The stage is now set for high-stakes, last-minute negotiations ahead of Thursday’s trade deadline. As investors worldwide track the interplay of geopolitical risks, macroeconomic data, and corporate performance, volatility is likely to remain a defining characteristic of global markets in the coming days.
