Global equity markets across Europe and Asia mostly notched gains on Tuesday, building on a mixed close for US stocks one day prior, as investors braced for a week packed with high-stakes events that could reshape near-term market trajectories.
Benchmark European indexes all edged into positive territory to kick off the trading day: Germany’s DAX climbed 0.5% to settle at 26,240.76, France’s CAC 40 added 0.3% to reach 8,480.52, and the UK’s FTSE 100 posted a modest 0.1% uptick to hit 10,869.93. Futures tied to major US indexes also pointed to a positive open, with S&P 500 futures up 0.3% and Dow Jones Industrial Average futures rising 0.2%.
Across Asian trading sessions, most major benchmarks followed the upward trend. Japan’s Nikkei 225 gained 0.5% to close at 65,856.43, led by a 2.3% jump for technology investment conglomerate SoftBank Group. South Korea’s Kospi reversed early session losses to climb 0.7% to 6,742.74, as traders stepped back into tech stocks to capitalize on discounted valuations following recent pullbacks. Hong Kong’s Hang Seng Index held nearly steady at 25,511.10, while China’s Shanghai Composite Index added 0.2% to 3,889.44. Australia’s S&P/ASX 200 rose 0.7% to 9,164.60, Taiwan’s Taiex gained 0.9%, and India’s Sensex bucked the regional trend with a 0.2% dip.
The upbeat day for global stocks came after a choppy Monday session on Wall Street, where the Dow Jones Industrial Average added 0.3% but the S&P 500 slipped 0.3% and the Nasdaq Composite fell 0.8%. Tech stocks led the downside move on Monday, as ongoing volatility persists around concerns that the AI-driven hype has pushed share prices unsustainably high, and that massive demand for AI-focused chips could soften if the technology fails to deliver projected profit gains. Chipmaking giant Nvidia, the biggest corporate winner of the AI boom so far, dropped 2.9% in Monday trading. The company is set to release its highly anticipated quarterly earnings report on Wednesday, a result widely expected to set the next big trend for AI-linked equities globally. Other major chipmakers also fell, with Micron Technology sliding 5.8% and Broadcom dropping 2.6%.
One bright spot for markets on Monday came from the US bond market, where pressure that has built through the summer of this year eased slightly after the US Treasury Department took emergency steps to calm volatility. The 10-year Treasury yield pulled back to 4.69%, down from 4.74% late Friday, returning to levels seen before the Treasury surprised markets with an announcement of expanded planned bond buybacks. Longer-term yields have surged through the summer, driven by investor concerns over persistent inflation, growing US government debt loads, and broader macroeconomic uncertainty. Elevated yields push borrowing costs higher for all sectors of the economy, not just the federal government, and have already driven mortgage rates higher and weighed on the US housing market.
Stephen Innes, managing partner at SPI Asset Management, noted in a Monday research note that recent discussions about using funds from the Treasury General Account to finance longer-dated bond purchases gave markets a temporary boost. “The latest discussion about using Treasury General Account cash to help finance purchases of longer-dated bonds gave the market something to chew on Monday, and it initially liked the taste. Long yields fell, and the curve flattened,” Innes wrote. However, he added that temporary market support does not resolve the deeper issues driving bond volatility: “But there is a difference between forcing the bond market to blink for an afternoon and solving the underlying problem.”
All market eyes are now turning to Friday, when new Federal Reserve Chairman Kevin Warsh is scheduled to deliver a keynote address at the central bank’s annual economic symposium in Jackson Hole, Wyoming — a venue that has historically hosted major US monetary policy announcements. Analysts widely expect Warsh to address persistent inflation and outline the Fed’s next policy moves to address rising price pressures.
In energy markets, oil prices retreated sharply on Tuesday after US Treasury Secretary Scott Bessent announced a new round of sanctions against Iran, and issued a warning that any countries continuing to conduct business with Tehran would face retaliatory measures. International benchmark Brent crude fell 2% to $88.74 per barrel in early Tuesday trading, while US benchmark West Texas Intermediate crude shed 2.2% to $83.14 per barrel. Oil has emerged as a major contributor to global inflationary pressures in recent months, and Brent has traded well above the $72 per barrel level it held before the outbreak of conflict involving Iran in late February. Last month, Brent swung wildly between $72 and $102 as investors shifted between optimism and pessimism over the potential for a US-Iran deal that would reopen the Persian Gulf to unimpeded oil tanker traffic. The new sanctions announced Monday already pushed Iran’s currency, the rial, to a new all-time low against the US dollar.
In foreign exchange markets, the US dollar edged higher against the Japanese yen, rising to 159.30 yen from 159.10 yen in prior trading. The euro held relatively steady, inching up slightly to $1.1670 from $1.1667.