EUROPEAN EQUITIES UPDATE: Downbeat trade as French politics takes centre stage; CAC 40 -2.0%

STOXX 600: -0.7%

• European bourses began the session on the backfoot and continue to languish around these levels, driven lower by notable underperformance in Paris.


• On Monday, French PM Bayrou said he would seek a confidence vote from parliament on September the 8th. Bayrou is seeking to garner support for his unpopular budget, which plans to squeeze EUR 43.8bln from government spending, vital for stabilising the dire state of France's finances. The three main opposition parties said they would not back the Prime Minister in a confidence vote, should they do so, his minority government would collapse. Politico wrote this “seems to mark the beginning of the end of the Bayrou government”. Looking to the start of September, President Macron could immediately name a new PM, call snap elections, or ask Bayrou to stay on as the lead in a “caretaker government”.


• Aside from the aforementioned French politics, drivers across the EZ are light. The docket today includes comments from ECB dove Villeroy, and BoE hawk Mann. Iran and E3 will convene for nuclear talks. Elsewhere, and on the trade front, the European Commission is expected to reveal its proposals to lift tariffs on US industrial goods and cars on Wednesday.

Sectors: Mostly Negative

• Sectors opened almost entirely in the red and continued their bearish bias throughout the morning.


• The underperformers are led lower by French heavyweights, hurting the likes of Banks, Construction and Insurance. French listed Socgen, BNP Paribas, Vinci, AXA and Alstom are the underperformers in the CAC, with losses ranging between -8% to -4%.


• In the green are Tech and Basic Resources; the latter being helped today as the mining-heavy FTSE 100 comes back to market after the UK holiday. Gains in miners are being facilitated by a rise in metals prices, namely Iron ore, after Rio Tinto halted production at a mine in Guinea.

US Equity Futures: ES -0.2%, NQ -0.2%, RTY -0.4%

• Mostly lower trade, led by losses in Europe.


• RTY underperforms following recent stellar performance, and as global yields rise on French political instability.


• The US Day sees the release of July durable goods (expected -4.0% M/M from a prior -9.4%); Conference Board’s gauge of consumer confidence (seen at 96.4 from 97.2); the Richmond Fed’s manufacturing gauge; Dallas Fed’s services gauge; the Atlanta Fed will update its GDP tracking model (currently models growth of 2.3%). In supply, the US will sell USD 69bln 2yr notes. The only speaker scheduled is Fed’s Barkin. After the US close, API weekly energy inventory data will be released

26 Aug 2025 - 10:00- Fixed IncomeEU Research- Source: Newsquawk