European Stocks Slide as Trade Tensions and French Political Risks Weigh on Sentiment

European equities turned lower on Tuesday, with markets struggling to shake off renewed fears of a U.S.-China trade war and ongoing political turbulence in France. The decline came despite a brief rebound in the prior session, as traders reassessed global risk appetite.

Broad-Based Losses Across Europe

By 08:15 GMT, the pan-European Stoxx 600 index slipped 0.7%, retreating toward a two-week low. The DAX in Germany fell 1.0%, the CAC 40 in France lost 0.8%, and the FTSE 100 in the U.K. shed 0.3%. The pullback followed a modest recovery on Monday, when markets had briefly stabilized after President Donald Trump appeared to tone down his earlier threats toward China.

Trump’s earlier pledge to impose 100% tariffs on Chinese imports rattled markets worldwide, particularly after Beijing responded by expanding restrictions on exports of critical rare earth materials vital to the electronics and defense sectors. Although Trump later sought to reassure investors that relations with China would “be fine,” both sides have since imposed new port fees on shipping groups, further clouding the trade outlook.

France’s Political Crisis Adds Pressure

Political risk in France added to the cautious tone. Two no-confidence motions—from both left-wing and right-wing parties—threatened the short tenure of Prime Minister Sebastien Lecornu, raising fears of another government collapse. President Emmanuel Macron, facing mounting pressure, has dismissed calls to resign, insisting on stability as one of France’s most severe political crises in decades deepens.

Corporate Movers: Michelin Slumps, Ericsson Surges

In corporate news, Michelin shares tumbled more than 8% after the tiremaker cut its annual outlook, citing weak margins and slowing sales in North America. The profit warning weighed on peers, with Pirelli in Italy and Continental in Germany also declining.

Conversely, Ericsson jumped over 14% after the Swedish telecom equipment maker beat earnings forecasts, with quarterly profit growth exceeding analyst expectations thanks to strong demand for 5G infrastructure.

Oil Prices Reverse as Trade Concerns Hit Demand Outlook

Oil prices fell again on Tuesday as investors worried that escalating trade tensions could dampen global demand. Brent crude futures slipped 1.8% to $62.21 per barrel, while West Texas Intermediate (WTI) dropped 1.8% to $58.43.

The pullback followed Monday’s brief recovery and reflected broader market caution ahead of the International Energy Agency’s monthly report, expected later in the day, which will provide fresh insight into supply-demand dynamics amid persistent fears of a global economic slowdown.

Outlook

With trade uncertainty, French political instability, and weaker corporate guidance clouding sentiment, analysts expect European equities to remain volatile in the near term. The market’s focus will likely stay on developments in Washington and Beijing, as well as the IEA’s report and upcoming earnings data from major European industrials.