Europe in the green as Wall Street hesitates ahead of US shutdown deal

European markets climbed on Tuesday, buoyed by signs of a possible end to the US government shutdown after the Senate sent a compromise funding measure to the House.

“The gains came as investors reacted to news of a Senate breakthrough to end the US government shutdown,” said David Morrison, Senior Market Analyst at Trade Nation.

“A vote in the US Senate cleared the way for further discussions on a bipartisan deal to end the government shutdown. This has raised hopes that federal agencies could soon reopen, easing a key overhang on markets,” Morrison explained.

Indications of a deal on Capitol Hill have reverberated across major European stock indices, with Germany’s DAX climbing by 0.30% in early trading and the EURO STOXX 100 going up 0.55%, the FTSE 100 marking a second-day climb at 0.93% despite the most recent UK jobs data indicating a weakening labour market.

In its November meeting, the Bank of Engand left the bank rate at 4% but indicated a dovish hold and that cutting interest rates was on the table if persistent disinflation continued.

Italy’s FTSE MIB and France’s CAC 40 both rose by around 0.66%, and the Swiss SMI rose by 0.86% amid reports that the non-eurozone country could be close to reaching a deal with the US administration to lower its 39% tariff rate, currently the steepest in Europe.

Meanwhile US equity futures edged lower in early European trade, reversing Monday’s slight gains as investors paused after the rally as they await news on Senate progress in ending the federal shutdown.

S&P 500 futures dipped by -0.2%, Nasdaq futures dropped by -0.4% and Dow futures went down by -0.05% as trading sentiment is shaped by whether the House will follow through on the funding measure.

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After years of lagging behind, European banks are also now outpacing their US counterparts, lifted by fat cash returns and a rerating from beaten-down levels.

The STOXX Europe 600 Banks proxy is up about 61% year to date, versus roughly 4–5% year to date for the SPDR S&P Bank ETF (KBE). KBE is a single stock-like fund that operates a broad basket of US bank shares and is a key indicator of how stateside banks are doing overall.

Many eurozone lenders started 2025 trading well below book, but steady earnings and regulator-approved dividends and buybacks have given the sector plenty of room to climb. In the US, banks have faced a longer spell of curve inversion, stickier deposit costs and uncertainty over capital rules.