London, September 30, 2025 – 2:00 PM BST — By Harshit
European stocks inched upward on Tuesday as investors weighed fresh U.S. trade tariffs announced by President Donald Trump and a lingering political deadlock in Washington. Market sentiment was cautious but leaned positive, with investors balancing corporate news and broader economic risks.
Market Performance
The pan-European Stoxx 600 rose 0.21% to 556.71 by mid-afternoon, with the FTSE 100 climbing 0.40% to 9,336.95 and Germany’s DAX edging 0.16% higher to 23,783.31. Spain’s IBEX 35 gained 0.65% to 15,415.10, while Italy’s FTSE MIB added 0.20% to 42,639.21. France’s CAC 40 bucked the trend, slipping 0.30% to 7,857.57.
Corporate Movers
Shares of Pandora, the Danish jewelry giant, dropped 1.9% after the company announced CEO Alexander Lacik would retire in March. He will be replaced by Chief Marketing Officer Berta de Pablos-Barbier, a former LVMH executive.
Meanwhile, German airline Lufthansa tumbled nearly 7% after unveiling plans to cut 4,000 jobs by 2030. The move comes alongside ambitions to expand its fleet and achieve an adjusted EBIT margin of 8–10%. UBS analysts noted in a client report that while the targets are “more challenging” than previous ones, an 8% margin remains realistic if execution is strong.
Trade Tariff Tensions
Global investors kept a close watch on Washington after President Trump announced new tariffs. Effective immediately, imports of timber and lumber face a 10% tariff, while kitchen cabinets, bathroom vanities, and upholstered furniture will be subject to an initial 25% duty, rising further in 2026. Trump argued the measures were necessary to protect U.S. industry and national security.
The announcement sparked concern about ripple effects on European exporters, with analysts warning of renewed trade friction at a time when global supply chains remain fragile.
U.S. Political Deadlock
Markets also tracked the looming threat of a U.S. government shutdown, as Democrats and Republicans remained divided over a federal funding bill. Following a White House meeting, Vice President JD Vance predicted a shutdown was likely: “I think we’re headed to a shutdown because the Democrats won’t do the right thing.”
Analysts cautioned that this standoff could prove more disruptive than past shutdowns, given ongoing worries about a slowing labor market, stagflation risks, and elevated stock valuations. Any prolonged impasse could also pressure credit rating agencies to reassess U.S. debt, especially after Moody’s downgraded U.S. credit in May.
U.K. Political Developments
In Britain, the Labour Party’s annual conference continued in Liverpool. Prime Minister Keir Starmer was scheduled to address delegates on Tuesday, following Finance Minister Rachel Reeves’ remarks on Monday. Reeves hinted at tax measures in the upcoming Autumn Budget but offered limited detail, leaving markets eager for clarity.
Global Outlook
Across the Atlantic, U.S. stock futures held steady after Monday’s gains, as Wall Street looked to close out September on a strong note. In Asia, markets were mixed after Chinese data revealed manufacturing activity had contracted for the sixth consecutive month, underscoring ongoing pressure in the world’s second-largest economy.
Investor Sentiment
Despite modest gains in European equities, sentiment remained fragile. With global trade tensions resurfacing and the specter of a U.S. government shutdown, investors are likely to remain cautious heading into October. Analysts expect volatility to persist as markets juggle corporate earnings, central bank signals, and political uncertainty.
