European equities traded mostly higher on Tuesday, as investors balanced cautious optimism with concerns over geopolitical risks, upcoming U.S. inflation data, and the start of the quarterly earnings season.
By 03:05 ET (08:05 GMT), Germany’s DAX advanced 0.1%, while the UK’s FTSE 100 also gained 0.1%. France’s CAC 40 slipped 0.1%, slightly underperforming regional peers.
Wall Street strength supports Europe
European markets took encouragement from a strong overnight session in the United States, where the S&P 500 closed at a fresh record high, driven largely by gains in technology stocks.
Sentiment was further supported by news that Japan’s Nikkei 225 also reached a record level. The rally followed reports suggesting Japanese Prime Minister Sanae Takaichi may call an early election in an effort to strengthen her parliamentary majority, potentially paving the way for additional fiscal stimulus.
Despite the positive backdrop, upside in European stocks was limited as investors remained focused on developments in Iran, where large-scale protests against the ruling authorities have turned violent, with reports of heavy casualties as security forces moved to restore order.
U.S. President Donald Trump said on Monday that any country conducting business with Iran would face a 25% tariff on trade with the United States. Iran’s key trading partners include China, several East Asian nations, Iraq, the United Arab Emirates, Turkey, and Germany. Trump is also expected to meet senior advisers later in the day to review policy options regarding Iran.
U.S. inflation data in focus
With little in the way of major European economic releases on Tuesday, attention shifted to the latest U.S. consumer inflation figures, the final major data point before the Federal Reserve meets later this month.
Economists expect the U.S. Consumer Price Index to remain unchanged at 2.7% year-on-year in December, matching November’s reading. On a monthly basis, inflation is forecast to rise 0.3%, in line with the previous month.
Core inflation, which excludes food and energy prices, is expected to edge up to 2.7% annually from 2.6%, while the month-on-month rate is seen accelerating to 0.3% from 0.2%.
Corporate updates and earnings in focus
In corporate news, Lindt & Spruengli reported organic sales growth of just over 12.4% in 2025, slightly exceeding market expectations, supported in part by higher cocoa prices.
Swiss chemicals group Sika posted a 4.8% decline in full-year sales, as weak construction demand and currency effects offset growth in local-currency terms.
In the UK, Whitbread reported a 2% rise in third-quarter group sales, helped by stronger accommodation revenue in both the UK and Germany.
Investor attention later in the session was expected to turn to Wall Street, where results from JPMorgan Chase and Bank of New York Mellon will effectively kick off the U.S. earnings season. Expectations for bank earnings remain high, although Trump’s announcement that credit card interest rates will be capped at 10% from January 20 has introduced an additional source of uncertainty.
Oil prices extend gains on Iran supply fears
Oil prices climbed again on Tuesday, rising for a fourth consecutive session as unrest in Iran raised concerns over potential supply disruptions from the key OPEC producer.
Brent crude futures rose 0.5% to $64.16 a barrel, while U.S. West Texas Intermediate crude gained 0.8% to $59.82 a barrel. Brent touched a seven-week high in the previous session, while WTI reached its highest level in a month.
Iran, one of OPEC’s largest producers, is facing its most significant anti-government demonstrations in years, adding to geopolitical risk premiums across energy markets.
