European markets are expected to open on a cautious note today, as concerns linger over China's economic recovery and investors await policy signals from the Trump administration. However, potential losses may be capped following a fifth consecutive session of gains in U.S. stocks overnight.
U.S. stock futures showed a decline, and Asian markets were generally lower as investors considered the potential implications of U.S. tariffs on China. In particular, Hong Kong's Hang Seng index saw a decline of over 2%, even amid reports of planned Chinese tax cuts on home purchases intended to revive the sluggish housing market.
The dollar index rose for the third consecutive day as investors anticipate critical U.S. inflation data, alongside reports on retail sales and industrial production, and commentary from Federal Open Market Committee (FOMC) members for further insights into the Federal Reserve's rate path.
In Europe, investor focus will likely turn towards significant economic indicators such as German economic sentiment, inflation data, and unemployment figures from the U.K. later today.
Gold remained relatively stable after a drop of over 2% on Monday, pressured by the dollar's ongoing strength. Oil prices maintained their largest two-week decline due to concerns over China’s demand.
U.S. stocks continued the previous week's rally overnight, buoyed by optimism surrounding proposed tax cuts and deregulation under Trump's second term. Both the Dow and the S&P 500 saw increases of 0.7% and 0.1% respectively, achieving new record highs, while the tech-oriented Nasdaq Composite showed little change.
European markets concluded Monday with firmness, ahead of a significant week for economic data releases. The pan-European STOXX 600 increased by 1.1%, marking its largest single-day gain in six weeks, driven by surges in defense stocks on expectations of heightened military expenditure in the U.S. and other nations during Trump's presidency. The German DAX and France's CAC 40 both rose by approximately 1.2%, while the U.K.'s FTSE 100 increased by 0.7%.
