European stock markets showed little movement on Tuesday, as investors adopted a wait-and-see approach ahead of a flood of crucial economic data from the United States. The cautious trading session, however, saw a sharp rally in defense stocks, which jumped following a fresh wave of airstrikes exchanged between Russia and Ukraine.
Market Snapshot and Sectoral Moves
The Stoxx Europe 600 Index was virtually flat as of 9:19 a.m. in Paris, reflecting the market's indecision. The standout performers were defense companies, with a dedicated basket of these stocks climbing 1.7%. This surge was a direct response to overnight events, which included heavy air raids on the Ukrainian capital, Kyiv, and retaliatory assaults on areas in southern Russia.
Amid the rising tensions, diplomatic efforts continued. A US official was scheduled to meet with a Russian delegation in Abu Dhabi, with former President Donald Trump noting progress on his peace proposal. On the broader market, mining and energy sectors managed to outperform, while the auto and travel and leisure sectors lagged behind.
Eyes on the US Fed and Economic Data
The muted trading came after a positive session on Monday, where European stocks gained on the back of dovish comments from the US Federal Reserve. Governor Christopher Waller stated he is advocating for an interest-rate cut in December, a signal that boosted investor sentiment.
Traders are now keenly awaiting a slew of data releases, including retail sales and consumer confidence figures, for clearer signals on the future path of monetary policy. The uncertainty surrounding the Fed's next move was highlighted by market experts.
"The Fed has a tradition of giving visibility to investors when it comes to interest rates decision and the volatility that we are witnessing currently is a reflection of its absence," said Raphael Thuin, head of capital market strategies at Tikehau Capital. He added, "The lack of visibility on the Fed's next move could be a big risk this year and for 2026 too."
Individual Stock Highlights
In corporate news, Kingfisher Plc saw its shares jump as much as 6.9%. The rally was triggered by the home-improvement retail giant boosting its profit guidance, providing a positive surprise to its shareholders.
