European stocks retreated Tuesday, tracking Wall Street lower as investors weighed the potential for additional U.S. tariffs and renewed political uncertainty in France.
At 07:35 GMT, Germany’s DAX fell 0.5%, France’s CAC 40 lost 1.8%, and the U.K.’s FTSE 100 dropped 0.6%.
Fed Independence Faces Scrutiny
European equities mirrored the negative sentiment from the U.S., following Wall Street losses as concerns mounted over Federal Reserve independence after President Donald Trump announced the dismissal of Governor Lisa Cook.
Cook rejected the president’s authority to remove her, stating she will “continue to carry out my duties to help the American economy.”
No U.S. president has previously attempted to remove a Fed governor, leaving the next steps uncertain. Analysts expect Cook may challenge the dismissal, potentially taking the case to the Supreme Court.
Digital Tax Disputes Fuel Tariff Fears
Across Europe, investors remained cautious after Trump warned that countries imposing digital taxes could face “subsequent additional tariffs” on their exports if the taxes are not rescinded.
Several European nations have levied such taxes on revenues from digital giants, including Alphabet’s Google, Meta’s Facebook, Apple, and Amazon. The move is widely seen as a direct challenge to the European Union’s Digital Services Act, a long-standing point of contention for U.S. administrations.
French Political Tensions Rise
In France, political instability resurfaced after the three main opposition parties announced they would not support a confidence vote called by Prime Minister Francois Bayrou on September 8 concerning his budget plans.
Should the government fall, President Emmanuel Macron could either appoint a new prime minister, ask Bayrou to remain as head of a caretaker government, or call an early election. Macron previously lost Prime Minister Michel Barnier to a no-confidence vote over budget issues in late 2024, just three months into office following a snap election in July of that year.
Corporate Updates: BAT CFO Departs and Earnings Reports
British American Tobacco (LSE:BATS) confirmed that CFO Soraya Benchikh is stepping down immediately after 15 months in the role.
Bakkafrost (TG:6BF) reported weaker second-quarter earnings, pressured by lower salmon prices and incident-related costs in Scotland. Meanwhile, TX Group announced a three-year share buyback program following a sharp decline in first-half results, with revenues, operating income, and net profit all down.
Oil Retreats as Gold Benefits from Safe-Haven Demand
Oil prices slipped, reversing some of the previous session’s gains, as traders monitored the Russia-Ukraine conflict for potential impacts on regional fuel supplies.
At 03:35 ET, Brent crude fell 0.6% to $67.78 a barrel, while U.S. West Texas Intermediate dropped 0.8% to $64.29 a barrel. Both benchmarks had surged nearly 2% on Monday, reaching two-week highs after Ukraine struck Russian energy infrastructure amid expectations of further U.S. sanctions on Russian oil.
Gold prices climbed, supported by safe-haven demand amid concerns over Fed independence following Trump’s announcement on Cook. Spot gold rose 0.2% to $3,373.99 an ounce, having earlier hit two-week highs, while October gold futures gained 0.1% to $3,419.22/oz.
The dismissal of Cook marks Trump’s latest move to exert influence over the Fed’s rate-setting activities.
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