FX.co ★ European Shares To Open Mostly Lower As Trump Picks JD Vance As Running Mate

European stocks are expected to open on a sluggish note Tuesday as investors express concerns about a potential second Trump presidency and its implications for U.S. foreign policy.

The addition of Vance to the GOP ticket has led to further questions regarding a new administration's commitment to Ukraine and the transatlantic alliance. “I have to be honest with you, I don’t really care what happens to Ukraine one way or another,” Vance stated in an interview with Steve Bannon in 2022.

Asian markets traded mixed, anticipating increased trade and geopolitical tensions should Trump secure a second term.

Gold edged closer to record highs, while oil prices continued to decline due to concerns about a slowing Chinese economy affecting demand.

The dollar hovered around five-week lows amid optimism regarding U.S. rate cuts. Federal Reserve Chair Jerome Powell indicated that the three inflation readings over the second quarter boosted policymakers' confidence that the pace of price increases is returning to the central bank's 2 percent target. "If you wait until inflation gets all the way down to 2 percent, you’ve probably waited too long," he added.

Separately, Fed Bank of San Francisco President Mary Daly mentioned that although inflation is cooling, more data is needed before making a final rate decision.

U.S. 10-year bond yields fell slightly ahead of the release of U.S. retail sales data for June and a speech from Fed's Adriana Kugler later in the day.

The European Central Bank (ECB) is scheduled to announce its interest rate decision on Thursday, with economists expecting the main refinancing rate and deposit facility to remain unchanged.

Eurozone foreign trade data and German economic sentiment survey results are expected later today.

U.S. stocks closed firmly overnight, driven by optimism about potential interest-rate cuts from the Fed and rising prospects of former President Donald Trump winning the upcoming elections. The Dow gained 0.5 percent, the S&P 500 increased by 0.3 percent, and the tech-heavy Nasdaq Composite added 0.4 percent, despite data indicating a continued decline in New York state manufacturing activity.

European stocks closed lower on Monday, pulled down by disappointing economic data from China and lackluster corporate earnings updates. The pan-European STOXX 600 dropped 1 percent, Germany’s DAX fell by 0.8 percent, France’s CAC 40 declined by 1.2 percent, and the UK’s FTSE 100 lost 0.9 percent.