European Stocks Rebound

European stocks closed firmly higher on Tuesday, trimming losses from last week with support from a respite in sovereign bonds despite the prolonged impasse between the US and Iran. The Euro STOXX 50 added 1.2% to 6,100 and the STOXX Europe 600 gained 0.7% to 625. The tech sector led the gains amid news that SK Hynix will double its wafer capacity and bullish signals from the largest companies. ASML surged 5% and Infineon gained 9.5%. Also, STMicroelectronics surged 15% after raising its earnings target and Prosus surged 9.4% after Tencent announced it was testing a new AI agent. Banks also closed sharply higher to track the rebound in sovereign bonds, with UniCredit, BNP Paribas, and Deutsche Bank adding more than 1.6%. Meanwhile, Eurozone's preliminary inflation data showed the headline rate rose to 3.2% as expected, while the core inflation rose slightly more than expected to 2.5%, consolidating bets of a rate hike by the ECB next week.

European stocks traded higher on Tuesday, with both the STOXX 50 and STOXX 600 gaining 0.6% after starting June with losses in the previous session. Investors took advantage of the recent pullback while assessing the sustainability of the global technology and AI-driven market rally. Market participants also remained focused on developments in the Middle East, where negotiations continue to fluctuate and the Strait of Hormuz remains largely closed. Still, a slight pullback in oil prices also helped to boost investors' mood. Meanwhile, Eurozone’s preliminary inflation data showed the headline rate rose to 3.2% as expected while the core inflation accelerate slightly more than expected to 2.5%. Tech shares remained among the top performers, including ASML Holding (1%), SAP (1.6%) and Infineon Technologies (5.3%). Prosus soared about 10% to top the STOXX 600 after a report showing Tencent, a company in which it holds a significant stake, is testing a new AI agent.

European equity markets were poised for a stronger open on Tuesday, recovering from the previous session’s losses as investors stepped in to buy the dip while evaluating the durability of the global technology and AI-driven rally. Traders also continued to monitor developments in the Middle East after Tehran reportedly suspended talks with Washington in response to Israeli strikes in Lebanon, although President Donald Trump said negotiations remain ongoing. In Europe, investors will focus on the Eurozone’s flash inflation report for May to assess how the Middle East conflict is influencing regional price pressures. Meanwhile, the corporate earnings calendar remains light, with no major earnings releases scheduled across Europe on Tuesday. In premarket trading, Euro Stoxx 50 futures rose 0.6%, while Stoxx 600 futures gained 0.5%.