European equities retreated on Tuesday as investors reacted to fresh political turmoil in France and an escalating dispute over the independence of the U.S. Federal Reserve. The benchmark STOXX 600 slipped 0.8% in early trading after flirting with a record high last week, while Paris’s CAC 40 fell more than 2%, leading regional declines. French financials bore the brunt of the sell-off. Shares in BNP Paribas dropped 6.2% and Société Générale lost 5.2%, helping drive the CAC 40’s slide to roughly 7,680 points. The risk aversion spilled into debt markets, pushing the spread between French and German 10-year yields to about 80 basis points, the widest since April. The market jitters follow Prime Minister François Bayrou’s decision to seek a confidence vote on 8 September for his plan to cut €44 billion from the 2026 budget. France’s three largest opposition parties have said they will vote against the minority government, reviving fears of a repeat of December’s ouster of the previous administration and clouding prospects for fiscal consolidation in the euro area’s second-largest economy. Adding to global unease, U.S. President Donald Trump late Monday dismissed Federal Reserve Governor Lisa Cook over alleged misconduct—an action Cook contests as illegal. The unprecedented move intensified worries about political interference in the central bank and helped trigger the broader pullback from risk assets.
CNBC: European stocks slide with France’s CAC 40 hit hardest as PM Bayrou faces a no-confidence vote over €44B in budget cuts. Global jitters deepen after Trump claims to fire Fed Gov. Cook. Traders eye French data, EU inflation & $NVDA earnings later this week.
EUROPEAN STOCKS FALL AS FRENCH GOVT FACES COLLAPSE; TRUMP TARGETS FED INDEPENDENCE
📉 European shares drop as French political instability and Fed independence concerns weigh on markets. Caution prevails amid ongoing uncertainty. #Finance #Investing #Markets https://t.co/QuMbPKpMED