European markets waver as Fed uncertainty and new economic data loom
European markets face a mixed start to the week as fresh economic data and uncertainty over US monetary policy weigh on investor confidence. While the Euro Area Manufacturing PMI showed slight improvement in January 2026, concerns about leadership changes at the Federal Reserve have left traders cautious ahead of key reports due on Monday.
The Euro Area Manufacturing Purchasing Managers' Index (PMI) rose to 49.4 in January 2026, up from 48.8 in December 2025. Germany's industrial sector had been the main drag on December's decline, though detailed 12-month figures for the country were not immediately available. Despite this modest recovery, broader market sentiment remains fragile.
European stocks had rebounded last week, but Wall Street ended Friday in negative territory. The DAX, Germany's leading index, is now expected to open lower on Monday, even after gaining 0.9 percent at the end of last week.
Adding to the unease, speculation over whether Kevin Warsh might replace Jerome Powell as Federal Reserve Chair has created uncertainty. Investors are waiting for clarity on US monetary policy direction.
On Monday, traders will also focus on new economic releases, including updated manufacturing PMI figures and German retail sales data.
The coming days will test market resilience as fresh data and Fed leadership speculation dominate discussions. With the DAX set to open weaker and Wall Street's recent losses still fresh, investors are bracing for potential volatility. Monday's economic reports could either ease concerns or deepen the cautious mood.
