European markets are set to open the new trading week on a positive note, buoyed by global optimism and investor confidence. Futures data suggest a strong start across major indices as traders closely monitor economic reports and geopolitical developments.

European Market Outlook: A Positive Start Expected

According to data from IG, key European stock indices are expected to open higher on Monday:

• FTSE 100 (UK): Up 14 points to 8,667
• DAX (Germany): Gaining 83 points to 22,966
• CAC 40 (France): Up 9 points at 8,057
• FTSE MIB (Italy): Rising 171 points to 38,391

The positive momentum comes amid cautious optimism in global financial markets, with traders evaluating economic data and geopolitical factors influencing the outlook.

Key Economic Reports: PMI Data in Focus

Investors are keeping a close watch on preliminary Purchasing Managers' Index (PMI) data from the UK, France, Germany, and the broader Eurozone. The PMI readings will provide insights into the strength of the manufacturing and services sectors, which are crucial indicators of economic health.

• Manufacturing PMI: A strong reading could signal growth and resilience in industrial production.
• Services PMI: Given the services sector's major contribution to European economies, this will be closely scrutinized for any signs of expansion or contraction.

A better-than-expected PMI could reinforce confidence in the European economy, while weaker data might raise concerns over slowing growth.

Global Market Sentiment: Asia and U.S. Futures Indicate Strength

Overnight, Asia-Pacific markets traded mostly higher, reflecting investor confidence ahead of key economic updates. In the U.S., stock futures are also in positive territory, signaling the possibility of continued equity market gains after last week's rally.

On Friday, Wall Street ended the session on a strong note, with all three major indices closing higher:

• Dow Jones Industrial Average: Up +0.6%
• S&P 500: Gained +0.7%
• Nasdaq Composite: Climbed +0.8%

The rally was driven by market optimism after former U.S. President Donald Trump hinted at potential flexibility in his proposed tariff policies. However, details remain uncertain, and investors are awaiting further clarity.

U.S. Trade Policy and Tariffs: Key Developments to Watch

Trade tensions remain a focal point for investors, particularly regarding Trump’s April 2 tariff deadline. The uncertainty surrounding potential tariffs has led to cautious optimism, with reports suggesting that:

• The scope of tariffs may be narrower than initially expected.
• Certain industry-specific duties could be excluded from the final plan.
• The Wall Street Journal reported that an administration official indicated possible exemptions, although details remain unclear.

If tariffs are imposed with broader restrictions, they could impact global trade dynamics, particularly affecting European manufacturers and exporters.

Market Outlook: What to Expect This Week

As the new trading week unfolds, several key factors will shape market sentiment:

1. Economic Data Releases: PMI reports and upcoming macroeconomic indicators will guide investor confidence.
2. Geopolitical and Trade News: Any developments related to U.S. tariffs and trade negotiations will be closely monitored.
3. Corporate Earnings: Investors will assess how companies are navigating inflationary pressures and shifting economic conditions.

Overall, European markets appear set for a positive start, with investor optimism fueled by global trends and economic data. However, traders remain cautious about potential headwinds, including trade uncertainties and inflationary risks.

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