European Stocks Eye Lower Open Despite Wall Street Gains

 The expected sluggish start in Europe follows a rebound in the US major averages on Monday, driven by strength in artificial intelligence trading and renewed expectations of a Federal Reserve interest rate cut. Asia-Pacific markets also traded higher overnight, aided by Wall Street's rally.

Traders are monitoring any news that could impact the Fed's upcoming monetary policy decision. According to the CME FedWatch tool, markets see a greater than 80% chance of a quarter-percentage point rate cut by the Fed in December.

This probability has increased since New York Fed President John Williams said last Friday that there is room for a rate cut "in the near future." San Francisco Fed President Mary Daly told the Wall Street Journal on Monday that she supports lowering rates due to labor market concerns. In Europe on Tuesday, earnings from Compass Group, EasyJet, and Kingfisher are due, while German GDP and French consumer confidence data are released.

Dutch lender ABN Amro
announced on Tuesday that it will cut 5,200 jobs by 2028 as it seeks to streamline operations and reduce costs. The bank also said in an update ahead of its Capital Markets Day that it has agreed to sell its personal loan subsidiary, Alfam, to Rabobank.

Elsewhere, regional defense stocks have fluctuated over the past week as the U.S. tries to move forward on a peace deal for Ukraine.

On Monday, European Union leaders gathered to discuss a 28-point peace plan, initially drafted by US and Russian officials, with no input from Ukraine or the rest of Europe. Under the initial draft, Ukraine reportedly would have had to make major concessions to Russia to end the war – including returning land seized after a massive invasion and reducing its military.

In a statement after the meeting, European Commission President Ursula von der Leyen said Europe has a key role in shaping Ukraine's future.

"Going forward, these are our core European principles: Ukraine's territory and sovereignty must be respected," she said. "Only Ukraine, as a sovereign country, can make decisions about its own military; it has control over its own destiny."

Investors in the UK are also preparing for the Autumn Budget on Wednesday, which will include the UK's budget. Chancellor Rachel Reeves is expected to announce a number of tax hikes.