European stock markets began Tuesday’s trading session with a cautious and somewhat hesitant tone, with the regional Stoxx 600 index wavering near the flatline as investors assessed the evolving global trade landscape and awaited key inflation data from the Eurozone.
About 25 minutes after the opening bell, the pan-European Stoxx 600 was trading around 0.1% higher, though it has been oscillating between a slight gain and breakeven since the session began, struggling to find clear momentum.
Most sectors were in the green, with utilities stocks leading the modest industry gains with a rise of around 1%.
Looking at the major national bourses, only the UK’s FTSE 100 was clearly in positive territory, last seen up by 0.2%.
This generally subdued start for Europe comes as global investors begin to focus on the looming expiration of US President Donald Trump’s 90-day reprieve from higher import duties, which is set to end next week.
Asia-Pacific markets traded mixed overnight as investors digested recent record gains on Wall Street and weighed the prospects for various trade deals.
US equity futures were little changed in early European hours after the S&P 500 had notched another record high to close out a stunning quarter.
Trade tensions and tariff deadlines in focus
The global trade picture remains a key driver of market sentiment. US Treasury Secretary Scott Bessent said on Monday that there are “countries that are negotiating in good faith.”
However, he also issued a warning, adding that tariffs could still “spring back” to the levels announced on April 2 “if we can’t get across the line because they are being recalcitrant.”
A significant development in this space was Canada’s decision to walk back its digital services tax in an attempt to facilitate trade negotiations with the United States.
Ottawa’s move to rescind the new levy came after President Donald Trump had stated on Friday that he would be “terminating ALL discussions on Trade with Canada.”
Key data on deck: Eurozone inflation and German unemployment
Focus in Europe today will also turn to crucial economic data. Preliminary Eurozone inflation figures are due, and these will be closely scrutinized as they could shape expectations for the European Central Bank’s interest rate outlook.
Additional data releases include German unemployment figures and the latest UK nationwide house price data.
On the corporate front, earnings reports from Sainsbury’s and Sodexo are expected, which could influence sentiment within their respective sectors.
Adding to the day’s narrative, a top European Central Bank official signaled a dovish tilt.
Belgian central bank chief Pierre Wunsch, speaking to CNBC’s Annette Weisbach at the ECB’s annual forum in Sintra, stated that risks to both inflation and growth in the euro area are now tilted to the downside.
“There is a broad consensus that we are very close to [the ECB’s 2% inflation] target now, the job is mostly done,” Wunsch said.
He added that the ECB will be monitoring economic data in the coming months to see if eurozone growth, particularly in production, improves. If it doesn’t, he suggested the central bank may need to be “a bit more supportive.”
This follows the ECB’s decision in June to cut interest rates to 2%, after inflation in the 20-nation bloc had eased to 1.9%.
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