LONDON — On Tuesday, European stocks are anticipated to start unevenly, with particular attention on France after the resignation of Prime Minister Sebastien Lecornu has thrown the nation into a new political turmoil.
The U.K.’s FTSE index is predicted to open a bit lower, while Germany’s DAX is expected to be up by 0.2%, France’s CAC 40 gaining 0.13% and Italy’s FTSE MIB expected to be down by 0.1%, based on IG’s data.
This week, France is under the spotlight following Lecornu’s unexpected resignation on Monday, occurring just a day after he formed a new government cabinet and only 27 days into his tenure.
In an unexpected development on Monday night, French President Emmanuel Macron extended Lecornu’s deadline by an additional 48 hours for “final discussions” with opposing parties in order to resolve the stalemate. Lecornu mentioned on X that he would update the president on Wednesday evening regarding any possible progress “so that he can draw all the necessary conclusions.”
Lecornu’s exit sent shockwaves through the markets; France’s CAC 40 index ended Monday down roughly 1.3%, having recovered some earlier losses. French banks were among the most affected, with Societe Generale, BNP Paribas, and Credit Agricole all decreasing by over 3% as the markets closed.
U.S. stock futures showed a slight decline on Tuesday night after Wall Street began the new trading week on a high note, driven by optimism regarding a potential increase in mergers and acquisitions activity alongside an expected Federal Reserve rate cut.
This record-setting market occurs as investors seem to be dismissing worries related to the ongoing U.S. government shutdown, which has reached its second week.
The shutdown has postponed the publication of crucial economic data, including the September jobs report that was slated for Friday, thus reducing the insights available for the Fed leading into its next interest rate decision.
A prolonged shutdown, along with this data gap, emerges during a time when concerns regarding the labor market and inflation stay prominent.
In Asia Pacific markets overnight, Japan’s Nikkei 225 achieved a record high on Tuesday for the second consecutive session, buoyed by the technology surge on Wall Street.
European data sets to be released on Tuesday encompass Germany’s factory orders, U.K. house pricing data, and France’s trade statistics.
— CNBC’s Pia Singh contributed to this market report.
