Europe close: Markets retreat amid French uncertainty, Fed fears
By Benjamin Chiou
Date: Tuesday 26 Aug 2025
(Sharecast News) - European stocks fell on Tuesday as sharp losses in Paris weighed heavily on market sentiment, along with fresh concerns about the independence of the Federal Reserve.
The Stoxx 600 was down 0.8% at 554.20, marking its second day in the red after hitting a five-month closing high of 561.30 on Friday.
Moderate falls of Zurich, London and Frankfurt were met with a 1.7% drop on the CAC 40 after France's three main opposition parties said they would not back a confidence vote called by Prime Minister Francois Bayrou for 8 September over his budget plans.
"French bond yields rose to levels last seen in mid-March, provoking a sharp sell-off in banks such as BNP Paribas and Société Générale," said Axel Rudolph, senior technical analyst at IG.
Meanwhile, uncertainty surrounding the future of the Federal Reserve was also hitting risk appetite after Donald Trump's latest interference at the US central bank.
"Donald Trump has been blunt when it comes to what he thinks of US central bank policy decisions, but up until today it's been mostly talk," saysAJ Bell head of financial analysis Danni Hewson.
"His decision to fire Lisa Cook, even if it is ultimately overturned by the courts, feels like a new chapter in this political thriller which really turns the heat up on simmering worries about the Fed's future independence."
French banks drop, Orsted jumps
French financial stocks were among the day's worst performers, with BNP Paribas, AXA, Société Générale and Credit Agricole all falling sharply on political uncertainty.
German peer Commerzbank was also firmly lower, a day after UniCredit raised its equity stake in the lender to 26%. Germany's government on Monday reiterated its opposition to the Italian bank's plans to take over Commerzbank.
Leading the risers was Orsted as the Danish wind power giant bounced back from a record low the previous session after the US government halted plans for a wind farm off Rhode Island.
London distribution group Bunzl was higher after reiterating full-year targets despite a mixed first-half report, in which the company reported a meagre rise in revenues and a dip in profit margins. The company, however, announced plans to resume a share buyback as it delivered a confident outlook.
Email this article to a friend
or share it with one of these popular networks:
You are here: news
10 Lower Thames St,
London EC3R 6EN