European equities moved in narrow ranges on Tuesday as investors weighed the latest political developments in France and awaited crucial U.S. inflation figures.
At 07:05 GMT, Germany’s DAX slipped 0.1%, France’s CAC 40 advanced 0.2%, and the U.K.’s FTSE 100 inched up 0.1%.
French Political Instability
France’s minority government led by Prime Minister François Bayrou collapsed on Monday after he lost a confidence vote, with Parliament voting 364-194 in favor of his removal. The defeat came after Bayrou failed to secure backing from opposition factions on both the right and left for 2026 budget plans aimed at narrowing the country’s large deficit.
President Emmanuel Macron must now appoint France’s fifth prime minister in under two years. While he is expected to select another centrist ally to lead a minority government, this solution is unlikely to resolve underlying political instability. French markets will face additional scrutiny on Friday when Fitch Ratings reviews the country’s AA- rating with a negative outlook, following last year’s downgrade by Moody’s after the prior government’s collapse.
U.S. Inflation in Focus
Despite political turbulence in Europe, market losses are expected to remain modest as investors anticipate upcoming U.S. inflation data, which will help gauge whether the Federal Reserve will cut interest rates next week. Market expectations are high for a September 16-17 rate reduction, though it is still unclear if the Fed will opt for a standard 25-basis-point cut or a larger 50-bps move.
Corporate Highlights
In corporate news, Dutch chip equipment maker ASML (EU:ASML) invested €1.3 billion ($1.5 billion) in French AI startup Mistral AI, becoming its largest shareholder. The companies also agreed on a strategic partnership to explore AI applications across ASML’s products and R&D.
Swiss pharmaceutical firm Novartis (BIT:1NOVN) announced plans to acquire U.S.-based Tourmaline Bio (NASDAQ:TRML) for $48 per share, valuing the biotech at $1.4 billion fully diluted.
Oil Prices Rise on Modest OPEC+ Production Increase
Crude continued higher after OPEC+ agreed to increase output in October by only 137,000 barrels per day, far below the monthly hikes of 555,000 bpd in September and August, and 411,000 bpd in previous months.
At 03:05 ET, Brent futures rose 0.8% to $66.57 a barrel, while U.S. West Texas Intermediate crude advanced 0.9% to $62.81 a barrel. Prices were also supported by speculation of additional sanctions on Russia, as U.S. President Donald Trump indicated he was ready to move to a “second phase” of restrictions following continued attacks on Ukraine.
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