Italy outperformed while Germany and Spain stumbled into Monday’s close — and overnight, Wall Street’s tech rally and a 12% VIX collapse have handed European bulls a clear carry-over bid heading into Wednesday’s open.

Where Europe Closed Last Session

Monday’s session split Europe into two camps. Italy’s FTSE MIB was the standout, climbing 0.63% to 50,208 as banks and industrials caught a bid. The AEX in Amsterdam added 0.37% to 1,045, helped by its tech-heavy composition. London’s FTSE 100 barely moved, edging up 0.05% to 10,373 in a session that lacked conviction from either side.

The losses were more telling. Germany’s DAX 40 dropped 0.58% to 24,616, with export-sensitive names feeling pressure from a firmer euro earlier in the session. Spain’s IBEX 35 fell 0.66% to 18,223, extending a pullback from recent highs. Switzerland’s SMI slid 0.50% to 13,321 as defensive healthcare and consumer staples names lagged — Nestlé and Roche both struggled for direction. The OMX Copenhagen 25 posted the sharpest decline at -0.69%, closing at 1,729 on Wednesday. France’s CAC 40 dipped 0.23% to 8,199, while the Euro STOXX 50 finished dead flat at 6,062.

The pattern was clear: cyclical southern Europe outperformed while defensive northern markets — Switzerland, Denmark, Germany — gave ground. Whether that rotation continues depends on the risk-on signal coming from New York.

US Overnight Snapshot

Wall Street delivered exactly that signal. The Nasdaq Composite surged 0.86% and the S&P 500 added 0.30% to 7,410, but the real story was under the hood — the Technology sector (XLK) ripped 2.15% higher on a wave of AI enthusiasm. Oracle’s earnings hype, Apple’s potential AI upgrade cycle, and Micron’s memory “supercycle” narrative all fed into the bid. Energy added 1.14%.

The VIX collapsed 12% to 18.9, its largest single-session drop in weeks, signalling that the options market has shed a layer of hedging. For Europe, this matters directly: ASML, SAP, and Infineon should see buying pressure at the open, and the broader risk-on tone should support DAX futures after Monday’s 0.58% decline.

The weak spots were Financials (-0.63%) and Materials (-1.32%). European miners like Rio Tinto and Glencore will feel that materials drag, while the bank softness may offset some of Italy’s recent momentum.

Commodity + FX Watch

Gold pulled back 0.78% as the VIX collapse and easing Middle East tensions — flagged by the dollar’s overnight slip — reduced safe-haven demand. That’s a headwind for Swiss gold-related names and London-listed miners like Fresnillo. WTI crude was essentially flat at -0.20%, offering no fresh catalyst for Shell or BP in either direction. Copper ticked up 0.28%, a mild positive for Glencore and Boliden.

The dollar weakened overnight on cooling geopolitical risk, which typically supports EUR/USD — helpful for European exporters priced in dollars. Airbus and LVMH tend to benefit from a softer greenback. USD/JPY edged up 0.13% to 160, keeping yen carry trades alive and supporting risk appetite broadly. AUD/USD slipped 0.28%, reflecting the materials sector drag more than any directional FX story.

What to Watch Today

• European tech at the open: With XLK up 2.15% and AI narratives dominating US headlines (Oracle, Apple, Micron), ASML, SAP, Infineon, and SUSE are the names to watch for gap-up potential. The DAX may recover Monday’s 0.58% loss on this alone.
• Materials sector pressure: XLB’s 1.32% decline is the sharpest US sector loss and a direct read-through for London-listed miners. Watch Rio Tinto, Anglo American, and Glencore for early weakness, especially with gold also soft.
• JPMorgan’s Tesla upgrade and EV chain: JPMorgan reversed its stance on Tesla, citing “massive physical AI potential.” European EV supply-chain names — Umicore, Infineon’s automotive segment, Continental — could catch a sympathy bid if the thesis gains traction across desks.
• Italian banks vs. the financials drag: FTSE MIB outperformed Monday, but US financials dropped 0.63%. Watch whether UniCredit and Intesa can sustain their bid or whether the US signal pulls them back to the pack.

Bottom Line

The setup leans risk-on for Wednesday’s European session. A 12% VIX drop, Nasdaq strength, and easing geopolitical tensions give bulls the carry-over they need — particularly for tech-heavy indices like the DAX and AEX that lagged on Monday. The one caution is the materials weakness filtering through from New York, which will keep pressure on London’s mining names and may cap FTSE 100 upside. Luna3 sees the balance tilting toward a modestly positive open across the region, with tech leading and commodities lagging.

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