European equities experienced a decline on Tuesday, as attention turned to France following the resignation of Prime Minister Sebastien Lecornu, which has led to a new political crisis in the country. The pan-European Stoxx 600 index experienced a decline of 0.2% by 8:36 a.m., as the majority of sectors and major bourses were in negative territory. This week, France has captured significant attention due to Lecornu’s unexpected resignation on Monday, occurring merely a day after he had established a new government cabinet and just 27 days into his tenure. On Monday evening, French President Emmanuel Macron unexpectedly granted Lecornu an additional 48 hours for “final discussions” with opposing parties in an effort to resolve the ongoing stalemate. Lecornu stated that he will provide a report to the president on Wednesday evening regarding any potential breakthrough “so that he can draw all the necessary conclusions.”

Markets experienced turbulence following Lecornu’s resignation; France’s CAC 40 index concluded the day down approximately 1.3% on Monday, having mitigated some of its earlier declines. French banks experienced notable declines, as Societe Generale, BNP Paribas, and Credit Agricole all fell by over 3% at the market’s close. On Tuesday, a number of French stocks experienced a rebound, moving into positive territory. Carmaker Renault experienced an increase of 2.8% in early trading, while Gucci-owner Kering saw an advancement of 2.48%. Christian Dior recorded a gain of 2.4%, and luxury giant LVMH rose by 1.8%. The perspective of the La Defense business district from the banks of the Seine reveals the Coeur Defense tower and the Alto tower prominently positioned at the center. To the right, the bustling traffic along the river stands in stark contrast to the leisurely movement of a barge. The iconic towers loom prominently against a heavily overcast sky in Nanterre, France, on July 31, 2025. The perspective of the La Defense business district from the banks of the Seine features prominently the Coeur Defense tower and the Alto tower at its center.

Spanish energy utility Naturgy experienced a decline of 3.11% following its announcement regarding the sale of approximately 3.5% of its shares, as part of its strategy to gain inclusion in the MSCI indexes. In other developments, a report on German factory orders significantly underperformed expectations, leading to market disappointment. In August, new orders in the manufacturing sector experienced a decline of 0.8% compared to the previous month. Analysts had anticipated a monthly rise of 1.1%. In corporate news, British oil giant Shell announced on Tuesday that it anticipates trading in its gas division to be “significantly higher” in the third quarter of this year compared to the second quarter. However, the firm also stated in an update that it was accounting for a $600 million impact from the cancellation of its Rotterdam biofuels project. Shell’s shares experienced an increase of 1.7% on Tuesday. U.S. futures exhibited a modest decline Tuesday night following Wall Street’s commencement of the new trading week at elevated levels, driven by optimism regarding a possible uptick in mergers and acquisitions activity, alongside expectations of a Federal Reserve rate cut.

The unprecedented market surge occurs as investors seem to dismiss worries associated with the ongoing U.S. government shutdown, which has now entered its second week. The shutdown has postponed the dissemination of crucial economic indicators, including the September jobs report that was anticipated on Friday, thereby reducing the information accessible to the Federal Reserve prior to its forthcoming interest rate decision. A prolonged shutdown, along with this data blackout, occurs during a period when concerns regarding the labor market and inflation are paramount. In the Asia Pacific markets overnight, Japan’s Nikkei 225 achieved a record high on Tuesday for the second consecutive session, buoyed by the technology rally observed on Wall Street.