European Stocks Edge Higher as French Politics and Trade Tensions Take Center Stage

European markets staged a cautious rebound on Wednesday, recovering slightly from the sharp losses seen earlier in the week as investors digested renewed U.S.-China trade frictions, a dovish tone from the Federal Reserve, and fresh political developments in France.

Modest Recovery Across Major Indices

By 07:10 GMT, the DAX in Germany rose 0.2%, the CAC 40 in France surged 2.3%, and the FTSE 100 in the U.K. added 0.1%, snapping a two-day losing streak. The rebound came after Tuesday’s selloff, when European equities hit two-week lows amid renewed fears of a trade confrontation between Washington and Beijing.

President Donald Trump’s threat to impose fresh tariffs on Chinese goods and to restrict trade ties in the cooking-oil sector—a response to Beijing’s cutback in soybean imports—has reignited investor anxiety over global growth.

Powell’s Dovish Stance Provides Relief

Markets found some support from Federal Reserve Chair Jerome Powell’s remarks on Tuesday, in which he hinted that the U.S. economy remains on stable footing but acknowledged emerging signs of a softer labor market. His comments were widely interpreted as dovish, reinforcing expectations of potential rate cuts later this year and providing a mild boost to risk sentiment across global equities.

French Political Developments in Focus

Investor attention turned sharply toward France, where Prime Minister Sebastien Lecornu—recently reappointed—announced plans to suspend a controversial pension reform until after the 2027 presidential election. The move came as an effort to appease leftist lawmakers and stabilize his fragile government amid what many analysts describe as France’s deepest political crisis in decades.

Despite the political volatility, French equities outperformed, with the CAC 40 leading regional gains. Meanwhile, official data from INSEE confirmed that consumer prices in France rose 1.1% year-on-year in September, in line with earlier estimates, suggesting that inflation pressures remain contained.

Corporate Highlights

In corporate news:

• ASML Holding warned of a sharp drop in China sales expected in 2026, despite stronger-than-expected quarterly bookings. The firm cited potential export restrictions and reduced demand from Chinese chipmakers.
• Entain, the U.K.-based betting firm, reported a 6% rise in net gaming revenue for Q3, supported by robust growth in its online operations.
• PageGroup, the recruitment specialist, posted a decline in quarterly profit, with strength in the U.S. and Asia failing to offset weaker European conditions.

Oil Prices Weaken Further

Crude oil prices extended losses on Wednesday after the International Energy Agency (IEA) warned that the global market could face a supply surplus of up to 4 million barrels per day in 2026.

• Brent crude fell 0.3% to $62.20 a barrel,
• WTI slipped 0.2% to $58.57 a barrel, both hovering near five-month lows.

The IEA’s outlook added pressure to an already fragile market, as traders weigh softer demand forecasts against the ongoing OPEC+ production unwinding and signs of oversupply risks in the year ahead.

Outlook

While European equities found some short-term relief from Powell’s dovish tone, political instability in France, lingering trade tensions, and weaker energy prices continue to cloud the regional outlook. Analysts expect volatility to remain elevated as investors await fresh updates on U.S.-China negotiations and Eurozone economic data later this week.