European and Asian stocks, as well as US futures, were higher on Tuesday, putting a halt to the fastest selloff in global equity markets since March 2020.
The Stoxx Europe 600 index rose 1.7% after Asian markets also closed higher, led by Japanese stocks after the country appeared to have moved early to enter trade talks with the US government. The country’s Nikkei 225 equity benchmark finished Tuesday’s session 6% higher, beating Hong Kong’s Hang Seng index, itself up 1.5%.
“From the investors’ perspective I wouldn’t expect a clear line of travel from here, it will likely be up and down as the news flow dictates,” Morningstar chief European markets strategist Michael Field said on Tuesday. “Europe will likely release a statement in the next week and it might be more the China approach than the Japan approach.”
In contrast with Japan’s diplomatic effort, China imposed a retaliatory 34% tariff on US goods last Friday, prompting US President Donald Trump to threaten a further escalation if they are not lifted by Tuesday.
“The one advantage of this crisis compared to those of the past is that this is entirely man-made and can be fixed quickly and easily,” according to Field.
US equity futures point to a positive New York open as well, with e-mini contracts on the S&P 500 up 1.7% and those on the tech-heavy Nasdaq-100 index up 1.5%. Among movers in the US pre-market, cyclical and technology names stood out, with Nvidia NVDA up 3.6%, Tesla TSLA up 2.8% and Palantir PLTR up 4%.
Aerospace and Defense Stocks Remain Erratic
European defense contractors were the region’s top-performing segment on Tuesday, with Sweden’s Saab AB SAABB up 9.9%, Leonardo LDO up 7.8% and Rheinmetall RHM up 6.4%.
The sector was among the worst decliners in the global selloff since the previous week, after a steep two-month rally had cast doubts about its valuations. On Monday, defense titles initially plunged, before closing the session in positive territory as traders saw opportunities for entry.
