European markets are expected to open broadly higher on Wednesday, continuing their positive run as optimism builds over the impending resolution of the U.S. government shutdown. Investor sentiment remains upbeat following signals from Washington that the government could reopen by the end of the week, easing concerns over economic data delays and fiscal uncertainty.

Markets Lifted by U.S. Political Progress

The U.S. Senate’s passage of a temporary spending bill earlier this week has set the stage for a full government reopening, pending approval from the House of Representatives. The development has been a key driver of global market stability, helping investors look beyond recent volatility tied to political gridlock in Washington.

According to data from IG, Germany’s DAX is set to open 0.4% higher, France’s CAC 40 up 0.25%, and Italy’s FTSE MIB up 0.22%, while the U.K.’s FTSE 100 is expected to trade flat. The gains reflect growing risk appetite across European equities, with investors encouraged by progress in the U.S. and continued signs of resilience in corporate earnings.

Corporate Earnings in Focus

A busy day of earnings will further shape sentiment, with major European firms including Infineon Technologies, E.ON, Experian, Alcon, RWE, Bayer, Swiss Life, Poste Italiane, SSE, and ABN Amro set to release quarterly results. Investors will be watching closely for signals of how companies are managing inflationary pressures, energy costs, and global demand fluctuations.

Particular attention will be on Infineon Technologies, as the semiconductor sector remains a focal point for investors amid shifting global supply chains and slowing AI-related momentum in U.S. tech stocks. Energy utilities like RWE and E.ON are also in the spotlight, with markets evaluating how Europe’s power companies are positioning themselves amid falling natural gas prices and the region’s continued push toward renewable energy.

Asia and U.S. Markets Offer Mixed Signals

Overnight in Asia, sentiment was dampened by a sharp selloff in Japan’s SoftBank Group, which saw its shares fall as much as 10% after the company disclosed it had sold its entire $5.83 billion stake in Nvidia. The Japanese conglomerate also trimmed its holdings in T-Mobile, raising a total of $9.17 billion in capital. Investors viewed the move as a strategic effort by SoftBank to rebalance its portfolio following significant gains from its earlier AI-related investments.

In the U.S., futures were largely unchanged on Tuesday night after a volatile session that saw investors rotate out of high-growth technology stocks. The Nasdaq Composite was pressured by weakness in Nvidia and other AI-linked names, while defensive sectors such as utilities and consumer staples outperformed. Although concerns over a potential “tech bubble” persist, market analysts say investors are becoming more selective, distinguishing between firms with durable AI exposure and those perceived as speculative beneficiaries.

Outlook: Momentum Meets Caution

European investors enter the midweek session with cautious optimism. The potential end of the U.S. shutdown removes a key source of uncertainty for global markets, while strong corporate results could help sustain momentum through the rest of the week. However, traders remain mindful of persistent macroeconomic headwinds, including the European Central Bank’s upcoming policy meeting and the broader debate over the pace of global growth in 2026.

With global equities still near multi-month highs, the balance between optimism over political progress and caution over market valuations will define near-term trading sentiment.