European equities moved modestly higher on Tuesday as U.S. Treasury yields pulled back from recent peaks, easing some of the pressure that higher borrowing costs have placed on global stock markets.
Bond yields declined following reports that the U.S. Treasury could draw on its nearly $1 trillion General Account to help finance its recently announced bond buyback programme. The prospect of using existing cash reserves provided some relief to debt markets and supported sentiment across European equities.
Iran Sanctions Prove Less Severe Than Feared
Investors also responded positively to a U.S. sanctions package targeting Iran that was less aggressive than some market participants had anticipated.
Washington warned countries against continuing business with Iran, threatening secondary sanctions against those that fail to comply. However, the Treasury Department stopped short of immediately imposing penalties.
The absence of more severe measures helped reduce concerns that the latest sanctions campaign could cause an immediate disruption to crude oil supplies.
Against this backdrop, Germany’s DAX Index gained 0.8%, France’s CAC 40 advanced 0.3% and the UK’s FTSE 100 rose 0.1%.
German Economy Expands Faster Than Initially Estimated
Economic data also provided some encouragement after Destatis reported that Germany’s economy performed better than previously estimated during the second quarter, supported by resilient exports despite ongoing geopolitical uncertainty.
Gross domestic product increased 0.3% quarter-on-quarter, revised higher from the preliminary estimate of 0.2%. The economy had expanded by 0.4% during the first quarter.
On an annual basis, German GDP growth accelerated to 1.0% in the second quarter from 0.7% during the previous three months.
The figures provided further support to European markets by suggesting that the region’s largest economy maintained momentum despite challenging global conditions.
Technology Stocks Gain Ahead of Nvidia and Marvell Earnings
Technology shares were among the stronger performers, with ASML Holding (EU:ASML) and Infineon Technologies (TG:IFX) advancing as investors prepared for important semiconductor earnings later this week.
Attention is particularly focused on Nvidia (NASDAQ:NVDA), whose results are expected to provide fresh insight into demand for artificial intelligence infrastructure and semiconductor spending.
Marvell Technology (NASDAQ:MRVL) is also due to report this week, adding to a busy period for the chip industry and potentially providing further indications of demand across data centres and AI-related markets.
The combination of lower U.S. Treasury yields, reduced concerns surrounding Iran sanctions and encouraging German economic data helped European equities maintain a modestly positive tone during Tuesday’s session.
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