European equities edged higher Tuesday as investors reacted to diplomatic developments in Washington between U.S. President Donald Trump and Ukrainian President Volodymyr Zelensky. The prospect of further dialogue, potentially involving Russian President Vladimir Putin, improved risk sentiment despite ongoing conflict.
At 06:05 ET (10:05 GMT):
- Germany’s DAX rose 0.3%
- France’s CAC 40 gained 0.8%
- U.K.’s FTSE 100 climbed 0.3%
Markets took encouragement from Trump’s pledge to provide Ukraine with U.S. security guarantees, though details remained vague. Yet, hopes of a peace roadmap were tempered by Ukraine’s disclosure that Russia launched 270 drones and 10 missiles overnight in one of the largest strikes this month.
The war, now in its fourth year, continues to disrupt global supply chains, elevate commodity prices, and pressure global growth. Land disputes remain the central obstacle: Ukraine demands full territorial restoration, while Moscow has reportedly insisted on permanent control over parts of the Donbas region.
Sectors React to Geopolitical Shifts
The optimism in broader markets was not shared evenly across sectors. European defense stocks came under pressure as traders priced in the possibility of reduced military demand if peace negotiations advance.
- Renk (ETR:R3NK), a German tank parts supplier, fell sharply
- Saab (ST:SAABb), Sweden’s defense firm, also declined
- Leonardo (BIT:LDOF) of Italy traded lower
By contrast, luxury goods companies benefited from the improved mood. Moncler (BIT:MONC) and Burberry (LON:BRBY) each rose around 3%.
Elsewhere in Europe, corporate earnings shaped investor sentiment:
- Huber+Suhner (SIX:HUBN) posted an 8.5% rise in operating profit for H1 2025, driven by aerospace and data center demand.
- Coloplast (CSE:COLOb) reported a 26% drop in net profit tied to extraordinary tax expenses despite sales growth.
- International Workplace Group (LON:IWG) announced record H1 revenue of $2.2 billion, up 2% year-over-year.
Oil Slides on Sanctions Relief Hopes
Crude prices retreated after Washington talks raised the possibility of a negotiated peace, which could ease sanctions on Russian exports and increase supply.
At 06:05 ET, Brent crude fell 1% to $65.97 per barrel, while WTI dropped 1% to $62.10. The losses followed Monday’s gains, when comments from U.S. trade officials criticizing India’s purchases of Russian oil briefly lifted prices.
Analysts warned that crude may remain volatile, with price direction tied closely to diplomatic progress. TD Securities noted that a durable easing of sanctions could push prices toward $58 per barrel by early 2026.
