A political shockwave emanating from Washington is set to send European markets tumbling at the open on Tuesday, as investors grapple with an unprecedented assault on the independence of the US Federal Reserve.
President Donald Trump’s abrupt firing of a central bank governor has injected a potent dose of instability into the global financial system, a crisis compounded by brewing political turmoil in France.
The tremors were first felt in Asia, where markets fell overnight as the world digested the news.
European stock futures are now pointing to a lower open, a direct reaction to Trump’s social media announcement that he had fired Federal Reserve Board Governor Lisa Cook.
The move, which follows months of escalating pressure on the central bank to lower interest rates, was met with a defiant response that promises a protracted legal and political battle. Cook declared in a statement that Trump had no authority to remove her and that she “will not resign.”
Political tremors rattle Paris
The anxiety imported from across the Atlantic is being met with a homegrown political crisis in France.
The country’s three main opposition parties have signaled they will not back a confidence vote called by Prime Minister Francois Bayrou over his contentious budget plans.
This political instability has put Paris on high alert, with the CAC 40 index set to open sharply lower, adding a significant layer of domestic risk to the global uncertainty.
Corporate crosscurrents and the Puma question
Against this grim backdrop, a few pockets of corporate drama are creating their own volatility. Shares in German sportswear giant Puma are a key focus after their spectacular 16% surge on Monday.
The jump was fueled by a Bloomberg report that its majority shareholder, the billionaire Pinault family, was exploring a potential sale of the firm.
After such a massive gain, the stock is expected to ease at the open, though it remains a bright spot in an otherwise gloomy market.
A tense calm before the data storm
While the immediate economic calendar is relatively quiet, with only a French consumer confidence reading on the docket today, the market is bracing for what’s to come.
The week will crescendo with the release of crucial inflation figures from across the European Union on Friday. Stateside, the entire tech sector and the broader market will be hanging on the earnings report from industry bellwether Nvidia on Wednesday.
For now, a tense and watchful calm prevails as investors navigate the political storms and await the economic data that will determine the market’s next move.
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