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European stocks continued their upward momentum on Tuesday, with major indexes expected to open higher following a solid start to the week. Confidence in defense and industrial sectors, combined with strength in global equities, has kept market sentiment buoyant across the continent.

According to data from IG, London’s FTSE 100 is set to climb about 0.31%, while Germany’s DAX is projected to open 0.22% higher. France’s CAC 40 is expected to edge up 0.20%, and Italy’s FTSE MIB is on track to gain 0.33%. These early signs point to continued recovery in European equities after a volatile September that saw investors grapple with geopolitical uncertainty and mixed earnings signals.

Defense Stocks Fuel Market Optimism

European defense companies remain the biggest market drivers this week. Thyssenkrupp surged nearly 7.9% on Monday, extending gains after successfully spinning off its warship division TKMS, which debuted strongly on the Frankfurt Stock Exchange.

Meanwhile, Hensoldt, a key defense electronics manufacturer, was the top performer on the STOXX 600 index, jumping nearly 8%, while Renk rose 6.7%, and Rheinmetall advanced 5.9%. The sector rally followed reports of renewed discussions between U.S. President Donald Trump and Ukrainian President Volodymyr Zelenskyy over territorial disputes — a reminder that European defense spending could remain elevated in the months ahead.

Defense-related equities across Europe have already risen over 12% year-to-date, outpacing the broader STOXX 600’s 6% gain, as investors seek exposure to industries benefiting from ongoing geopolitical tensions and higher NATO budget commitments.

Earnings Season in Focus

The third-quarter earnings season is gaining pace this week, with L’Oréal and Assa Abloy among the key European firms set to report Tuesday. Investors are closely watching for signs of resilience in consumer demand and industrial production amid concerns over slowing inflation and cautious spending in the eurozone.

Although there are no major economic data releases scheduled for Tuesday, analysts expect market momentum to be guided by corporate results and commentary on 2025 forecasts.

Global Markets Maintain Positive Tone

The optimism is not limited to Europe. In the United States, S&P 500 futures were modestly higher overnight, signaling continued strength after Monday’s rally that pushed the index up 1.1%, its best daily performance in three weeks. Investors in New York are preparing for a packed earnings calendar, with Netflix and Coca-Cola both set to report results that could influence sentiment across the consumer and tech sectors.

In Asia, markets mirrored the upbeat tone. South Korea’s Kospi climbed more than 2%, notching its sixth consecutive record high, driven by optimism surrounding a potential trade deal with Washington. Earlier last week, U.S. Treasury Secretary Scott Bessent told CNBC that trade negotiations with South Korea were “nearing completion,” fueling investor confidence across the region.

Japan’s Nikkei 225 also posted gains of 0.8%, while Hong Kong’s Hang Seng index edged up 0.6%, supported by renewed interest in Chinese tech shares and policy stimulus hopes from Beijing.

Investor Outlook

Market strategists suggest that this week could set the tone for the remainder of the quarter. The combination of solid corporate earnings, easing inflation pressures, and improving trade sentiment has provided a temporary relief for global investors. However, concerns remain around energy prices, potential interest rate adjustments by the European Central Bank, and geopolitical instability in Eastern Europe.

Overall, the market’s current rally reflects renewed investor appetite for cyclical and defense-linked assets — signaling cautious optimism as global economies adjust to slower but steadier growth patterns.