Global stock indices closed lower on Tuesday as traders reacted to uncertainties surrounding potential economic policies under a second Trump administration. European equities showed relative resilience, with the STOXX 600 rising 0.3% while U.S. benchmarks declined.
- S&P 500 declined 0.6%, Nasdaq Composite dropped 0.9%
- STOXX 600 rose 0.3% amid diversification demand
- 10-year U.S. Treasury yield increased to 4.32%
- Euro strengthened to $1.0835
- Eurozone Q4 GDP growth at 0.7% annualized
- MSCI Europe outperformed S&P 500 by 3.7% year-to-date
Global equity markets edged lower on Tuesday as investor sentiment wavered ahead of key economic data and amid growing speculation over the economic agenda of a potential second Trump administration. The S&P 500 dropped 0.6%, while the Nasdaq Composite lost 0.9%, pressured by tech stocks, which declined 1.2% amid concerns over regulatory shifts and trade policy reversals. In contrast, the STOXX 600 gained 0.3%, signaling a flight to diversification as U.S. investors reassessed overexposure to technology and growth-oriented sectors. Analysts note that European markets may offer a tactical advantage amid rising geopolitical and policy volatility in the U.S. A senior European equity strategist at a major global investment firm highlighted that while Europe is not expected to deliver outsized returns compared to 2025’s strong performance, its relative stability and broader sector representation make it a compelling diversification tool. The strategist noted that the MSCI Europe Index has outperformed the S&P 500 by 3.7 percentage points year-to-date, despite a recent pullback. Investor attention is now turning to the Federal Reserve’s upcoming meeting and the first major U.S. inflation report of the year, scheduled for Thursday. Yields on the 10-year U.S. Treasury rose to 4.32%, reflecting increased expectations for rate hikes. Meanwhile, the euro strengthened to $1.0835, supported by stronger-than-expected Q4 GDP data from Germany and the Eurozone, which grew at a 0.7% quarterly rate.