European stock markets started Wednesday’s session on a positive note, with the pan-European Stoxx 600 index moving higher in early deals.
The gains were led by a strong rally in mining and banking stocks, alongside a significant jump in wind energy companies, as investors reacted positively to the latest version of a major US legislative package.
Shortly after the opening bell, the pan-European Stoxx 600 index was up 0.35%. Mining and banking stocks were leading the sectoral gains, with both sectors up around 1.2%.
A standout story in early trading was the performance of Danish wind turbine makers Vestas and Orsted, whose shares jumped an impressive 8.4% and 5%, respectively.
This surge came as investors digested the latest text of the US ‘One Big Beautiful Bill’, which appears to be more favorable to the renewables sector than previously feared.
Analysts at Citi noted that the version of the bill that passed in the US Senate on Tuesday “provides significant relief for wind.”
An earlier draft of the legislation had caused Vestas shares to fall on Monday.
Central Bank watch and looming trade deadlines
European traders will be keeping a close eye on further developments from the European Central Bank’s annual forum in Sintra, Portugal, on Wednesday.
ECB President Christine Lagarde is due to address policymakers today, and her comments will be scrutinized for any hints about the central bank’s future policy path.
It is widely expected that the ECB will lower its key rate, the deposit facility rate, in September.
This expectation has been solidified by data released on Tuesday which showed that the eurozone inflation rate had hit the central bank’s 2% target.
On the data front today, unemployment figures are due from Spain, Italy, and the wider European region. There are no major corporate earnings reports scheduled in Europe on Wednesday.
Meanwhile, the shadow of US trade policy continues to loom over markets.
With President Donald Trump’s July 9 tariff deadline creeping closer, countries are scrambling to finalize trade deals with the US President Trump has recently suggested that India is likely to sign a deal, whereas Japan is not.
A shifting global landscape: dollar’s dominance questioned
All of these factors have left markets in a state of flux as they head into the second half of the year.
The first half was dominated by relentless US dollar selling, as investors grappled with President Trump’s often chaotic trade policies and actively sought alternative places to park their money.
The euro has had a blistering 2025 so far, gaining 14% and sitting at its highest level since September 2021.
However, whether the euro could genuinely replace the dollar as the world’s reserve currency of choice remains an open question.
Central bankers gathered for their annual conference in the Portuguese resort of Sintra do not expect a major challenge to the dollar’s status any time soon.
“It’s not going to happen just like that overnight. It never did historically,” said European Central Bank President Christine Lagarde.
However, she also acknowledged a fundamental shift in the global financial order: “But there is clearly something that has been broken. Whether it is fixable, or whether it is going to continue to be broken – I think the jury’s out.”
This comes as President Trump’s tax bill, which is expected to add to the already enormous US debt pile by slashing taxes while reducing social safety net programs and boosting military and immigration enforcement spending, now heads to the House of Representatives for possible final approval.
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