European equity markets are poised to open higher on Tuesday, buoyed by growing optimism that the United States is on the verge of ending its record-breaking government shutdown. The move could ease global investor anxiety, restore policy clarity, and stabilize short-term growth expectations across both sides of the Atlantic.

According to data from IG, futures indicate a 0.6% rise in the U.K.’s FTSE 100, a 0.3% gain in Germany’s DAX, and 0.3% in France’s CAC 40, while Italy’s FTSE MIB is projected 0.37% higher. The upbeat sentiment reflects a broad relief rally driven by the U.S. Senate’s passage of a funding bill late Monday, marking a critical step toward ending the longest shutdown in American history.

U.S. Legislative Breakthrough Sparks Global Relief Rally

The U.S. Senate approved a bipartisan measure by a 60–40 vote, with support from several Democratic lawmakers and nearly all Republicans. The bill funds the federal government through January 2026, ending a 40-day shutdown that had disrupted services, stalled data releases, and eroded consumer and business confidence.

The legislation now heads to the House of Representatives for final approval before reaching President Donald Trump’s desk. Market participants largely expect the president to sign it into law, averting further economic damage.

“The shutdown has been a key overhang for markets, amplifying uncertainty around fiscal and monetary policy,” said Hannah Meyer, senior macro strategist at Schroders. “An end to the impasse could restore some calm, though investors will remain alert to political risk heading into next year’s budget cycle.”

Wall Street reflected this relief on Monday, with the S&P 500 closing 0.9% higher and the Nasdaq gaining 1.5%, helped by a renewed wave of enthusiasm around artificial intelligence stocks.

Tech Rebound Reignites Market Confidence

AI-related optimism once again served as the global risk-on trigger. Nvidia (NVDA) surged nearly 4% on renewed demand projections, while Alphabet (GOOG) and Microsoft (MSFT) extended gains after announcing new AI infrastructure investments.

This tech-led rebound is filtering into European markets, where semiconductor and data center-related companies such as ASML, Infineon, and STMicroelectronics are expected to open higher.

“The U.S. tech rally is providing much-needed momentum to Europe’s broader indices, which have lagged U.S. benchmarks this quarter,” said Luca De Santis, market strategist at BNP Paribas. “However, the focus in Europe remains on earnings resilience rather than speculative growth stories.”

Earnings Season: Focus Turns to Financial and Telecom Giants

Investors in Europe will also be watching a fresh round of corporate earnings reports on Tuesday, with results due from SoftBank, Nebius, Munich Re, CEZ Group, and Vodafone.

Munich Re, one of the world’s largest reinsurers, is expected to benefit from lower claims volatility and improved premium pricing, while Vodafone’s performance will be scrutinized for progress in restructuring and debt reduction.

SoftBank’s report, meanwhile, will shed light on how its Vision Fund portfolio is coping with the broader tech funding slowdown, while Czech utility CEZ Group faces scrutiny over energy price hedging and infrastructure investments amid Europe’s ongoing transition to renewables.

“Earnings are the next major test for European equities,” said Sophie Lambert, head of European equity research at Deutsche Bank. “While macro sentiment has improved with the U.S. deal, valuations remain stretched in parts of the market, especially in luxury and industrials.”

Outlook: Optimism Tempered by Economic Headwinds

While Tuesday’s market tone is broadly constructive, investors remain cautious about Europe’s sluggish growth outlook and persistent inflation risks. A prolonged U.S. shutdown had already started to dent global supply chains and delay key U.S. data — factors that still leave uncertainty around central bank timing for rate cuts.

With both European Central Bank (ECB) and Federal Reserve policymakers maintaining a cautious tone, traders are likely to focus on upcoming inflation and employment data once normal reporting resumes.

Still, the combination of a potential U.S. fiscal resolution and a rebound in global tech sentiment is enough to lift near-term risk appetite. As one London-based fund manager put it: “Markets don’t need perfect clarity right now — just less chaos.”

If the U.S. House passes the funding bill as expected, Europe’s rally could gather pace, setting the stage for a more stable final quarter in what has been one of the most politically volatile trading years in recent memory.