By Harshit | October 7, 2025 | London | 12:10 PM BST
LONDON — European stocks traded slightly higher on Tuesday as investors closely monitored political uncertainty in France following the surprise resignation of Prime Minister Sebastien Lecornu, less than a month into his tenure.
Market Overview
By 12:10 p.m. London time (7:10 a.m. ET), the pan-European Stoxx 600 index rose 0.2%, with most sectors and major bourses in positive territory:
- CAC 40 (France): 7,986.20 (+0.18%)
- DAX (Germany): 24,435.45 (+0.23%)
- FTSE 100 (UK): 9,496.79 (+0.19%)
- FTSE MIB (Italy): 43,175.89 (+0.07%)
- IBEX 35 (Spain): 15,566.80 (+0.06%)
- Stoxx 600 (Europe-wide): 570.85 (+0.11%)
The modest rebound followed Monday’s sell-off, when France’s CAC 40 dropped 1.3% amid fears of a prolonged political crisis. French banking stocks — including Societe Generale, BNP Paribas, and Credit Agricole — tumbled over 3% during the previous session.
Political Turmoil in France
Lecornu’s resignation after just 27 days in office, and a day after unveiling his cabinet, shook confidence in France’s political stability.
President Emmanuel Macron granted him 48 hours to seek compromise with rival parties. Lecornu confirmed on X that he would present updates by Wednesday evening, allowing Macron to “draw all the necessary conclusions.”
The sudden instability comes at a sensitive time for France’s economy, already grappling with slow growth and high public spending. Analysts warn prolonged gridlock could erode investor confidence and weigh on French and wider European markets.
Market Movers in Europe
Luxury stocks led Tuesday’s recovery, signaling investor confidence in global consumer demand:
- Kering (Gucci owner): +6.6%
- Christian Dior: +3.9%
- LVMH: +3.5%
- Renault: +1.7%
Meanwhile, Spanish energy firm Naturgy slid 3.6% after announcing it would sell 3.5% of its shares to join MSCI indexes.
In Germany, economic weakness was evident. The Federal Statistical Office reported that factory orders dropped 0.8% in August, missing forecasts of a 1.1% rise. The data raised concerns about Germany’s industrial slowdown, a core driver of the eurozone economy.
Corporate Updates
British energy major Shell told investors its gas trading division would perform “significantly higher” in Q3 compared to Q2. However, it also projected a $600 million loss from canceling its Rotterdam biofuels plant. Shares rose 1.6% despite the mixed guidance.
Other corporate headlines included ongoing mergers and acquisitions across Europe, particularly in the technology and healthcare sectors, which have attracted renewed investor interest during a volatile political climate.
Global Market Outlook
Across the Atlantic, U.S. stock futures traded flat following record-breaking gains on Wall Street Monday, buoyed by M&A activity and expectations of a Federal Reserve rate cut later this year.
The U.S. government shutdown, now entering its second week, has delayed critical economic reports such as September’s jobs data, reducing visibility for Fed policymakers ahead of their next interest rate decision.
In Asia, Japan’s Nikkei 225 hit fresh record highs, extending gains from Wall Street’s tech rally. Investors continue to bet on strong corporate earnings, even as concerns linger over global growth and U.S. fiscal uncertainty.
Investor Sentiment
For now, European stocks have stabilized, but analysts caution volatility will remain until France clarifies its leadership situation. “Markets can live with slow reforms, but they can’t live with outright paralysis,” said one London-based economist.
If Lecornu fails to reach a deal and Macron is forced to appoint another prime minister, France could face weeks of uncertainty. That outcome, combined with slowing growth in Germany, might weigh further on European markets.
