The surprising strength that characterized the start of September has given way to a palpable sense of fear, as a dark cloud of uncertainty rolls in from across the Atlantic.
European stocks opened firmly in the red on Tuesday, with investors unnerved by the ominous twin threats of a potential US government shutdown and a fresh salvo in President Donald Trump’s relentless trade war.
The pan-European Stoxx 600 index was 0.2 percent lower shortly after the opening bell, with most sectors and major bourses in negative territory.
The cautious mood follows a mixed session in Asia and comes as a series of powerful risks converge, threatening to upend a market that is already grappling with the weight of a historically weak month.
A corporate casualty in a sea of red
The risk-off sentiment was immediately reflected in the corporate world. Shares of the Danish jewelry giant Pandora lost 3.5 percent in early trade, a sharp drop that sent the company to the bottom of the Stoxx 600.
The sell-off was triggered by the news that its CEO, Alexander Lacik, will be retiring in March, a surprise announcement that has injected a dose of uncertainty into one of Europe’s most recognizable brands.
The first tremor of anxiety for the broader market is being driven by the ever-present tariff landscape.
President Trump announced on Monday that he would impose a 10 percent tariff on imported timber and lumber, alongside an initial 25 percent duty on imported kitchen cabinets, bathroom vanities, and upholstered furniture.
The president declared that such imports were threatening the US economy and eroding national security, a familiar justification for a move that injects a fresh dose of instability into global trade relations.
A government on the brink
The second, and perhaps more immediate, threat is the growing specter of a US federal government shutdown.
A high-stakes meeting at the White House on Monday between the president and top congressional leaders appears to have ended in a dangerous impasse.
Following the talks, Vice President JD Vance delivered a grim and pessimistic assessment.
“I think we’re headed to a shutdown because the Democrats won’t do the right thing,” he said, a statement that has put global markets on high alert.
While shutdowns are not typically market-moving events, this time feels different. Investors are already on edge, contending with a slowing labor market, the rising risk of stagflation, and elevated stock valuations.
A prolonged shutdown could not only disrupt the economy but also prompt rating agencies to rethink the status of US credit, which was already downgraded by Moody’s in May.
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