European Markets Set for Weak Open as Investors Ignore Wall Street Rally

European markets are poised for a muted start on Tuesday, with major indices expected to open flat to slightly lower despite a rebound in U.S. stocks at the beginning of the week. Early projections show London’s FTSE drifting marginally lower, Germany’s DAX down 0.2%, France’s CAC 40 slipping 0.42%, and Italy’s FTSE MIB unchanged. Traders across Europe appear cautious, choosing not to mirror the optimism seen on Wall Street.

The downbeat sentiment comes after U.S. markets rallied on Monday, led by renewed strength in artificial intelligence stocks and growing confidence that the Federal Reserve may deliver another interest rate cut in December. Asia-Pacific markets also traded higher overnight, buoyed by the positive U.S. momentum. Still, European traders remain wary as they await fresh cues on monetary policy and economic data.

Investor attention continues to center on the Federal Reserve’s next move, with markets pricing in an 80% chance of a quarter-point rate cut next month, according to the CME FedWatch Tool. Hopes for looser policy strengthened after New York Fed President John Williams said there was room to lower rates “in the near term.” His comments were echoed by San Francisco Fed President Mary Daly, who voiced concerns about the labor market and signaled support for easing.

Back in Europe, a series of key corporate updates and economic reports are expected Tuesday. Earnings from Compass Group, EasyJet and Kingfisher are due, along with Germany’s latest GDP figures and French consumer confidence data. In major corporate news, Dutch lender ABN Amro announced plans to cut 5,200 jobs by 2028 as part of a restructuring effort. The bank also revealed it would sell its personal loans unit, Alfam, to Rabobank.

Geopolitics also remain front of mind for investors, as EU leaders discuss a controversial U.S.-drafted peace proposal for Ukraine. European Commission President Ursula von der Leyen stressed that Ukraine’s sovereignty must be respected and that only Ukraine can decide its future. Meanwhile, U.K. investors are bracing for Wednesday’s Autumn Budget, where Chancellor Rachel Reeves is expected to unveil a series of tax hikes.

source: cnbc