European stocks moved cautiously on Tuesday, with major indices struggling to find clear direction as investors look ahead to a packed month of monetary policy decisions.
Around 03:05 ET (08:05 GMT), the DAX in Germany and the FTSE 100 in the U.K. each rose 0.1%, while France’s CAC 40 slipped 0.1%.
Global monetary policy in focus
European equities started December on a soft note, closing lower on Monday. Even so, the region’s main benchmarks remain on track for solid yearly performance, helped by rising conviction that the U.S. Federal Reserve will begin cutting rates next week.
Both the German DAX and the FTSE 100 are set to end 2025 with gains above 18%, whereas the CAC 40, weighed down by political uncertainty, is on pace for a more modest 10% advance.
Markets are now pricing in an 87.2% probability of a quarter-point rate cut by the Fed, according to the CME FedWatch Tool. The Bank of England is also widely expected to ease policy this month amid cooling inflation and sluggish growth, especially after tax increases were announced in last week’s Autumn Budget.
Later today, investors will also receive flash eurozone inflation numbers. Annual price growth is projected to come in slightly above the ECB’s medium-term target, but this is unlikely to alter expectations that the central bank will remain on hold through 2026.
Corporate buybacks poised to support European stocks in 2026
Beyond central bank dynamics, analysts at Barclays see further support coming from corporate activity next year.
Companies in Europe bought back €19.3 billion worth of shares in November 2025 — close to the highest level since 2017 — according to a Tuesday note from the bank. Buybacks accounted for 2.3% of all European trading volume last month, with energy and financial firms generating more than 2.5% of volume through repurchases.
Fourth-quarter execution is already running ahead of historical trends, and the pipeline for 2026 looks substantial: roughly 70% of next year’s buyback authorizations remain untapped. Barclays’ models also point to around €50 billion in fresh buyback announcements expected in the first quarter.
The bank forecasts 8% earnings-per-share growth for European equities in 2026, with automakers, telecom companies and energy groups offering some of the highest free-cash-flow yields across sectors.
Oil prices inch higher
Crude benchmarks held on to Monday’s gains, supported by geopolitical tensions and cautious optimism around global supply dynamics.
Brent edged up 0.1% to $63.20 per barrel, while WTI rose 0.2% to $59.41. Both contracts gained more than 1% on Monday, with WTI hovering near a two-week high.
Hopes for progress in talks over Ukraine remain fragile. President Volodymyr Zelenskiy said Kyiv’s priorities include safeguarding sovereignty and securing robust security guarantees, acknowledging that territorial disagreements remain the most difficult issue. U.S. envoy Steve Witkoff is expected to brief Russian officials on Tuesday, though a near-term end to the nearly four-year conflict appears unlikely.
Separately, tensions have risen between Washington and Caracas after U.S. officials signaled they may impose tighter restrictions on Venezuela — a country believed to hold the world’s largest oil reserves — potentially including an airspace closure.
Over the weekend, OPEC+ confirmed a small production increase for December but opted to pause any further increases in early 2026 amid growing concern about a possible supply surplus.
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