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European equity indices posted modest gains early Tuesday, with investors eyeing the release of key eurozone inflation data that could shape the European Central Bank’s next policy moves. Caution also lingered over global trade tensions and upcoming central bank decisions.
As of 03:02 ET (07:02 GMT), Germany’s DAX rose 0.3%, France’s CAC 40 added 0.2%, and the U.K.’s FTSE 100 climbed 0.3%.
Eurozone Inflation Data in Spotlight
Markets are bracing for the flash estimate of eurozone inflation for May, with analysts expecting consumer prices to ease to an annual rate of 2.0% from April’s higher-than-expected 2.2%. The softer reading could give the ECB the green light to cut interest rates again by 25 basis points at Thursday’s policy meeting, marking the eighth rate cut in a year.
While this week’s reduction is widely priced in, the ECB’s forward guidance will be the key focus as investors seek clarity on the path ahead amid global trade headwinds and shifting inflation dynamics.
Trade Tensions Remain a Key Risk
Uncertainty over U.S. trade policy continues to loom large, particularly following mixed court rulings on the legality of President Donald Trump’s tariffs. Investors are also closely tracking trade talks between the U.S. and China, which reportedly soured last week.
White House press secretary Karoline Leavitt said on Monday that Trump and Chinese leader Xi Jinping are expected to speak this week, following Trump’s accusations that China violated an agreement to ease tariffs and trade restrictions.
Meanwhile, the U.S. administration is urging negotiating partners to submit their best trade proposals by Wednesday, aiming to fast-track discussions before a self-imposed deadline in five weeks.
Corporate Highlights
- British American Tobacco (LON:BATS): The tobacco giant forecast slightly stronger-than-expected first-half revenue, driven by growth in its U.S. operations and higher demand for modern oral products like Velo.
- Julius Baer (SIX:BAER): The Swiss wealth manager unveiled a new three-year strategy through 2028 under new leadership, with fresh financial targets set after a comprehensive operational review.
- Airbus (EPA:AIR): The world’s largest aircraft manufacturer delivered 51 planes in May, down 4% year-on-year, with total deliveries for the first five months of 2025 at 243 aircraft, 5% lower than the same period in 2024.
