European stocks fall; political uncertainty weighs on French market

Investing.com - European stocks retreated Tuesday, following Wall Street lower while investors also fretted about the potential of more U.S. tariffs as well as additional political uncertainty in France. 

At 03:35 ET (07:35 GMT), the DAX index in Germany dropped 0.5%, the CAC 40 in France slumped 1.8% and the FTSE 100 in the U.K. fell 0.6%. 

Fed independence under threat? 

European equities have continued the negative global sentiment following losses on Wall Street overnight amid concerns about the independence of the Federal Reserve after U.S. President Donald Trump announced the firing of Governor Lisa Cook. 

Cook rejected Trump’s ability to dismiss her, and responded by stating that she will “continue to carry out my duties to help the American economy."

No president has attempted to remove a Fed governor before, so just what follows from here is unclear, but it’s likely a Cook challenge to Trump’s firing will end up in the Supreme Court. 

Tariffs threatened over digital taxes 

Back in Europe, investors are also reacting with caution after the U.S. president threatened countries that have digital taxes with "subsequent additional tariffs" on their goods if those nations do not remove such legislation.

Many countries have levied taxes on the sales revenue of digital service providers, including Alphabet’s Google, Meta’s Facebook, Apple and Amazon. 

That said, this move could be seen as an attack on the European Union’s landmark Digital Services Act, which has been a longstanding issue for multiple U.S. administrations.

French political instability

Additionally, French political stability is back in focus after the country’s three main opposition parties said they would not back a confidence vote called by Prime Minister Francois Bayrou for Sept. 8 over his budget plans.

If the government falls, President Emmanuel Macron could name a new prime minister immediately or ask Bayrou to stay on as head of a caretaker government, or he could call a snap election. 

Macron lost his last prime minister, Michel Barnier, to a no-confidence vote over the budget in late 2024, after just three months in office following another snap election in July that year.     

BAT loses its CFO 

In the corporate sector, tobacco giant British American Tobacco (LON:BATS) said its finance chief Soraya Benchikh is stepping down with immediate effect, after about 15 months in the role.

Bakkafrost (OL:BAKKA) reported a drop in second-quarter earnings, as lower salmon prices and incident-related costs in Scotland weighed on the Faroese salmon farmer’s results.

TX Group (SIX:TXGN) announced a three-year share buyback program after the Swiss media company reported sharply lower first-half results, with declines across revenue, operating income and net profit.

Crude falls but gold gains

Oil prices fell, handing back some of the previous session’s outsided gains as traders closely monitored developments in the Russia-Ukraine conflict for potential disruptions to regional fuel supplies.

At 03:35 ET, Brent futures dropped 0.6% to $67.78 a barrel, and U.S. West Texas Intermediate crude futures fell 0.8% to $64.29 a barrel.

Both contracts rose to their highest in more than two weeks on Monday, gaining almost 2% as Ukraine struck Russian energy infrastructure, and with traders anticipating more U.S. sanctions on Russian oil.

Gold prices rose as safe haven demand was buoyed by increased concerns over Federal Reserve independence after Trump said he was firing Governor Lisa Cook. 

Spot gold rose 0.2% to $3,373.99 an ounce, after earlier climbing to two-week highs, while gold futures for October rose 0.1% to $3,419.22/oz. 

The Cook firing is Trump’s latest attack on the Fed, and comes as the president seeks to gain more influence over the Fed’s rate-setting activities.