U.S. stock index futures edged lower in subdued trading as investors returned to a holiday-shortened week following Presidents' Day. European markets opened quietly, with most blue-chip indices posting gains. Lingering anxieties over artificial intelligence (AI) expenditure and competitive pressures weighed on sentiment, dragging futures tied to the tech-heavy Nasdaq down by 0.7%.

Oil prices dipped in early trading, with direct talks between the U.S. and Iran scheduled for later Tuesday in Geneva. Meanwhile, the U.S. dollar climbed to an 11-day high against a basket of currencies ahead of a busy week for economic data releases. Gold held below $5,000 per ounce. Traders awaited the U.S. ADP employment report due Tuesday, along with inflation figures from the U.S. and Japan later in the week.

U.S. equity futures declined during European morning hours, with pre-market trading showing the Nasdaq down 0.6%. Futures linked to most of the "Magnificent Seven" tech stocks were lower, though Amazon was an exception, rising 0.2% pre-market and poised to snap a nine-day losing streak. S&P 500 and Dow Jones futures fell 0.3% and 0.1%, respectively.

Japan's Nikkei 225 closed down 0.2%, marking its fourth consecutive decline, with investment group and tech leader SoftBank dropping 5.1%. Chinese markets remain closed until next Monday. South Korean markets are expected to reopen on Thursday, with Hong Kong markets resuming on Friday.

European stock indices opened calmly and were broadly higher, with no major stock swings. London's FTSE 100 rose 0.4%, after hitting another record closing high on Monday. InterContinental Hotels Group shares gained 3% on revenue growth, while mining stocks within the index declined. Germany's DAX slipped 0.15%, with its second-largest component, Siemens, edging down 0.3% after a 6.4% drop on Monday. Automotive stocks within the index advanced. Spain's IBEX 35 and Italy's FTSE MIB saw muted moves, rising 0.2% and 0.1% respectively. Paris's CAC 40 was up 0.1%, despite being weighed down by industrial stocks, with defense group Thales falling 2.3%. Software firm Capgemini rose 1.5% amid broad gains in software shares.

The U.S. dollar strengthened to a near one-week peak, supported by safe-haven flows as U.S. traders returned from the Presidents' Day holiday. U.S. stock futures turned negative as concerns over potential future disruptions from AI, which have pressured numerous sectors and dampened risk appetite, persisted. Investors are looking ahead to the release of Federal Reserve meeting minutes on Wednesday and U.S. fourth-quarter GDP growth data and PCE inflation figures on Friday for further clues on the timing of the Fed's first interest rate cut. The DXY dollar index reached a high of 97.247.

The British pound fell to an 11-day low against the U.S. dollar and a near one-week low against the euro.

U.S. Treasury yields moved lower across the curve during Asian trading, as markets continued to price in Fed rate cuts this year following data on Friday showing a slowdown in U.S. January inflation. According to LSEG data, money markets currently anticipate approximately 65 basis points of Fed rate reductions this year, with a 100% probability of a first cut priced for July, though a June move remains possible. The 10-year Treasury yield fell 3.1 basis points to 4.024%.

Eurozone government bond yields followed U.S. Treasuries lower in early trading. Potential market influences on Tuesday include German and Finnish bond auctions and Germany's ZEW economic sentiment index. The 10-year German bund yield declined 1.9 basis points to 2.735%, close to the 11-week low of 2.729% touched on Monday.

Signs of pressure in the UK labour market fuelled expectations of an imminent Bank of England rate cut. Data released Tuesday showed the UK unemployment rate rose to 5.2% in the final quarter of 2025, while wage growth slowed. Following the data, the 2-year UK gilt yield dropped to an 18-month low of 3.557%. The 10-year gilt yield fell 2.8 basis points to 4.366%.

Bitcoin and Ethereum declined as worries over potential AI disruption persisted and U.S. stock futures weakened. Investors awaited key U.S. economic indicators this week, with PCE inflation and Q4 growth data due Friday. Analysts at Saxo Bank noted in a research report, "The key question this week is whether macro stability, particularly surrounding Fed communication and inflation data, can reignite sustained inflows into crypto exchange-traded funds." Bitcoin fell 0.8% to $68,279, while Ethereum dropped 0.7% to $1,984, according to LSEG data.

Oil prices declined ahead of U.S.-Iran talks. Brent crude fell 0.9% to $68 per barrel, while West Texas Intermediate crude dropped 0.8% to $62.66. Analysts at ING stated, "Thin liquidity due to the Lunar New Year holiday has limited broader price moves." However, tensions remain elevated, and prices could stay volatile in the near term. Media reports indicated Iran conducted live-fire military drills in the Strait of Hormuz on Monday, heightening concerns about potential disruption to regional oil supplies if a diplomatic solution is not reached. The Strait is a critical chokepoint for oil transit. Investors are also monitoring U.S.-mediated talks between Russian and Ukrainian officials.

Gold prices retreated below $5,000 in thin trading. New York gold futures declined 2.2% to $4,937.40 per ounce. Analysts at Sucden Financial commented, "Liquidity conditions remain insufficient, especially in metal markets. Unless speculative sentiment decisively re-emerges, this backdrop could confine price action to relatively narrow ranges in the short term."