Global stock markets moved higher on Tuesday after a series of record-breaking sessions, supported by easing tensions in oil markets, solid U.S. economic indicators, and a fresh wave of corporate earnings reports.
In early European trading, Paris gained 0.52%, Frankfurt rose 0.90%, London advanced 0.66%, Milan climbed 0.97%, and Madrid edged up 0.11%, following record closes the previous day in Paris, Frankfurt, and Madrid.
The decline in oil prices helped ease concerns over inflation and contributed to lower bond yields, creating a more favorable environment for equity markets.
At the same time, U.S. economic data confirmed the resilience of the world’s largest economy. Manufacturing activity in the United States accelerated in July, exceeding investor expectations thanks to positive trends in new orders and production, according to data released by the Institute for Supply Management (ISM).
“This combination of falling oil prices and stronger growth has created a particularly favorable environment for equity markets,” said Jim Reid, economist at Deutsche Bank.
Middle East tensions remain a key market factor
Investors are continuing to monitor geopolitical developments closely. U.S. President Donald Trump said on Monday that talks with Iran were taking place “right now,” despite Tehran’s earlier denial.
The announcement helped reduce part of the inflation risk premium that had built up in July as tensions in the Middle East intensified.
The two global crude benchmarks fell by around 5% on Monday, although prices recovered slightly after Iran’s denial, which “keeps alive the very real possibility of renewed hostilities,” according to Kyle Rodda, financial market analyst at Capital.com.
At around 07:15 GMT, Brent crude was up 1.09% at $84.68 per barrel, while U.S. West Texas Intermediate (WTI) gained 0.46% to $80.71.
“Risks linked to the Middle East conflict remain high, and contradictory information continues to fuel uncertainty,” said Jochen Stanzl of Consorsbank.
Energy companies in focus
Oil companies remained under scrutiny after strong earnings reports from major groups including BP, ExxonMobil, and Chevron, supported by higher energy prices linked to geopolitical tensions.
British oil giant BP reported a more than doubling of second-quarter profit to $3.9 billion.
“Markets were expecting a strong performance, and they were not disappointed,” said Kathleen Brooks, research director at XTB.
On Monday, Donald Trump criticized major oil companies, accusing them of making excessive profits and calling on them to lower fuel prices.
Airlines, however, are facing pressure from rising jet fuel costs linked to Middle East tensions. Lufthansa shares fell 6.86% in Frankfurt after the German carrier reported a more than 50% year-on-year decline in second-quarter operating profit.
Zalando shares fall despite strong results
German online fashion retailer Zalando dropped 12.6% in Frankfurt following significant profit-taking by investors.
The company reported double-digit growth in sales and profits in the second quarter, supported by the acquisition of About You, while maintaining its annual forecasts. However, a slight decline in its margin due to the integration of the Hamburg-based group weighed on investor sentiment.
Asian markets remain resilient
Asian markets showed resilience despite ongoing volatility.
South Korea’s Kospi index ended 1.62% higher after fluctuating throughout the session amid continued movements in major technology stocks.
Tokyo’s Nikkei index gained 0.32%, although it remained under pressure from a stronger yen, which affects Japanese exporters.
The Japanese currency traded at around 157.68 yen per dollar at 07:15 GMT, maintaining much of its recent gains following coordinated intervention by Tokyo and Washington in the foreign exchange market.
The two countries agreed to conduct large-scale yen purchases to strengthen the currency after it recently fell to its weakest level against the dollar in four decades.
