European shares posted small gains on Tuesday as markets digested a landmark trade pact between the European Union and India, while investors awaited a stream of corporate earnings and the start of a key U.S. Federal Reserve policy meeting.
At 03:05 ET (08:05 GMT), Germany’s DAX was up 0.2%, France’s CAC 40 rose 0.3% and the U.K.’s FTSE 100 climbed 0.3%.
Summary
The announcement of a Free Trade Agreement between the European Union and India gave markets a boost, but trading moves were measured. Market participants are now focused on incoming quarterly results from a large number of U.S. companies this week and on the Federal Reserve’s two-day meeting, expected to result in a pause in its recent cycle of rate cuts.
EU-India trade agreement lifts sentiment
Sentiment improved after leaders unveiled what was described as a historic Free Trade Agreement between the EU and India. Negotiations for the pact first began in 2007. The deal, which the announcement said covers 25% of global gross domestic product and one-third of international trade, follows trade flows between the two of $136.5 billion in the fiscal year through March 2025. Together, the two economies were noted as accounting for nearly one-fifth of global trade and roughly 25% of the world’s population.
The trade news helped counterbalance renewed trade tensions stemming from U.S. policy moves. The announcement comes amid actions by U.S. President Donald Trump, who raised tariffs on South Korea to 25% from 15% citing the country’s failure to enact a trade deal agreed last July. Over the weekend, Trump also warned he would impose a 100% tariff on Canada if Ottawa signed a trade deal with China.
Economic and sectoral datapoints
Separately, European new-vehicle registrations continued to recover. Data released earlier Tuesday showed European car sales rose for a third consecutive year in 2025, with new-vehicle registrations increasing 2.4% to 13.3 million units, helped by another rebound in December.
Beyond regional releases, the eurozone calendar was light on major economic data for Tuesday. Instead, attention has shifted to the U.S. Federal Open Market Committee meeting, which begins later in the session and runs for two days.
Analysts at ING observed that the “FOMC meeting is very likely to see monetary policy left unchanged after 75bp of interest rate cuts spread over the previous three meetings.” They added: “The fact that growth is strong, unemployment is low, equity markets are close to all-time highs and inflation is above target all argue for a pause.”
Earnings calendar and notable company news
The weekly earnings schedule is set to intensify. While European corporate reporting is picking up, the bulk of investor attention will be on Wall Street, where more than 90 S&P 500 firms are due to report quarterly results.
Tuesday’s U.S. reports include Boeing (NYSE: BA) and American Airlines (NASDAQ: AAL). The tech-heavy portion of the calendar continues with results from Meta Platforms (NASDAQ: META), Tesla (NASDAQ: TSLA) and Microsoft (NASDAQ: MSFT) on Wednesday, followed by Apple (NASDAQ: AAPL) on Thursday. Data cited indicated that roughly three out of four S&P 500 companies have beaten expectations so far this quarter.
In Europe, luxury group LVMH (EPA: LVMH) is scheduled to release annual results after markets close on Tuesday, with investors watching for signs of a recovery. Several other firms reported results on Tuesday: Swedish engineering group Sandvik (ST: SAND) posted a 2% decline in full-year revenue, affected by currency movements though orders and profit trends showed mixed signals. HMS Networks (ST: HMSN) delivered a 64% rise in fourth-quarter adjusted operating profit, driven by higher sales even as order intake fell. Norwegian oil and gas producer Var Energi (OL: VAR) said fourth-quarter net production increased 43% from a year earlier, helped by greater oil and gas volumes and the resolution of operational issues at key assets. Puma (ETR: PUMG) drew attention after China’s Anta Sports Products said it will acquire a 29% stake, making Anta the company’s largest shareholder.
Oil market backdrop
Oil prices eased slightly on Tuesday after recent gains, though the market remained supported by supply disruptions caused by severe winter weather in the United States. Brent futures fell 0.5% to $64.46 a barrel, while U.S. West Texas Intermediate futures slipped 0.4% to $60.38 a barrel. Both benchmarks had recorded weekly gains of 2.7% last week and closed Friday at levels not seen since January 14.
Losses were restrained by estimates that U.S. producers lost as much as 2 million barrels per day of output over the weekend - about 15% of national production - because of a severe winter storm that stressed energy infrastructure and power grids.
What to watch next
Markets will be watching incoming corporate earnings from both sides of the Atlantic and the Federal Reserve’s policy decision. With rate cuts already implemented over the prior three meetings and key macro indicators showing resilience, the Fed’s likely pause will be parsed for guidance on the path of future policy.
Investors will also be assessing how the EU-India trade agreement translates into tangible trade flows and sector-specific outcomes over time, and whether ongoing geopolitical trade friction from other quarters will offset the pact’s potential benefits.