European stocks set to rebound as geopolitical fears abate


European shares are set to open higher on Tuesday amid an easing of concerns over geopolitical tensions in the Middle East.

Britain’s FTSE 100 is seen rising 45 points to 7,607, Germany’s DAX climbing 70 points to 13,187 and France’s CAC lifting 32 points to 6,042, according to IG index data.

Market focus is largely attuned to geopolitical developments following Washington’s targeted killing of Iran’s top military commander Qasem Soleimani in Iraq. Equity markets fell the past two sessions amid a flight to safety, but look to be changing course as Monday passed with no new escalation in tensions.

Confusion arose however as a letter surfaced showing U.S. plans to pull troops from Iraq, only to be followed by Defense Secretary Mark Esper labeling it “inconsistent” and stating “there has been no decision whatsoever to leave.”

In Asia, equities rose with Japan leading the gains. The Nikkei 225 and Topix Index both rose around 1.5%, while MSCI’s broadest index of Asian shares excluding Japan climbed almost 0.8%.

Back in Europe, market players are likely to monitor political developments in Spain. Socialist leader Pedro Sanchez is expected to garner enough support in parliament for his left-wing coalition government later in the day.

In terms of data, Swiss, Italian and euro zone inflation figures for December are due to be released, as well as European retail sales for November.

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