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Wednesday, September 10, 2025
What’s happening: European stocks closed mostly higher on Tuesday following the collapse of the French government.
What happened: France’s Prime Minister François Bayrou was ousted in a confidence vote after just nine months of being in office.
President Emmanuel Macron appointed his defence minister, Sebastien Lecornu, as France’s new PM.
Why it matters: France plunged into another political crisis after François Bayrou was defeated at a confidence vote, which saw 364 of a total of 558 votes going in favour of ousting the Prime Minister. Wide concerns over France’s debt and the inability to get a budget passed resulted in the ousting.
Bayrou had called the vote in a final bid to win support for austerity measures aimed at reducing debt.
France’s President Macron appointed his close ally, Sebastien Lecornu, as the new PM after Francois Bayrou submitted his formal resignation. Lecornu would be the fifth Prime Minister of France in less than two years and would face several challenges ahead.
Meanwhile, economic data released on Tuesday showed France’s industrial production fell by 1.1% in July, following 3.8% growth in the previous month, which was the strongest since July 2020. However, the recent reading came in better than market expectations of a 1.8% decline.
The STOXX Europe 600 Index gained 0.06% to close at 552.39 on Tuesday. London’s FTSE 100 rose 0.23% to 9,242.53, while France’s CAC 40 added 0.19% to reach 7,749.39. Germany’s DAX 40 bucked the trend and fell 0.37% to settle at 23,718.45.
The EUR/USD forex pair slipped to 1.1708 this morning, while the EUR/GBP pair declined slightly to 0.8655.
What to watch: Investors await the European Central Bank’s interest rate decision on Thursday. The ECB kept rates unchanged at its July meeting, after announcing eight rate cuts since last year, which resulted in borrowing costs falling to their lowest levels since November 2022. Markets widely expect the ECB to keep rates unchanged at its upcoming meeting as well.
Context: The CNY/USD forex pair edged lower this morning as investors digested the latest economic data.
Details: Data released this morning showed China’s consumer prices fell 0.4% year-over-year in August, following a flat reading in the previous month. The figure was higher than market estimates of a 0.2% decline.
The latest reading signalled consumer deflation for the fifth time this year, with prices falling at the steepest pace since February. China’s food prices were down 4.3% year-over-year in August, compared to a 1.6% decline in the previous month.
China’s producer prices declined 2.9% year-over-year in August, following a 3.6% downturn in the previous month. However, the figure came in-line with market estimates. Although the latest reading indicated producer deflation for the 35th straight month, it was the smallest decline since April.
Weakness in the US dollar lent support to the CNY/USD forex pair this morning. The US dollar index, which measures the greenback’s performance versus a basket of major peers, edged lower to 97.77.
The CNY/USD pair fell around 0.1% to 7.1273 this morning, while the CSI300 index declined 0.25% to 4,425.32.
What to watch: With no major economic data due this week, investors await the release of reports on industrial production, retail sales and unemployment rate from China at the start of next week. China’s industrial production had grown by 5.7% year-over-year in July, representing a slowdown from June’s 6.8% growth. Markets widely expect a further slowdown to 5.1% in August.
Analysts expect China’s retail sales to surge by 5.1% year-over-year in August following 3.7% growth in July, while China’s surveyed unemployment rate is expected to remain at 5.2% in August.
Other Markets: US trading indices closed higher on Tuesday, with the Dow Jones index, S&P 500 and Nasdaq 100 up by 0.43%, 0.27% and 0.33%.
Ukraine’s military forces announced a major drone attack on Russia’s occupied Donetsk. The news sent the RUB/USD pair lower in forex trading this morning.
Philippines’ unemployment rate surged to 5.3% in July, from 4.7% in the year-ago month. This being the highest unemployment rate since August 2022 exerted pressure on the PHP/USD forex pair.
Japan’s Reuters Tankan index for manufacturers climbed to +13 in September. This being the highest reading since August 2022 sent the JPY/USD pair higher in forex trading this morning.
New Zealand’s visitor arrivals jumped 6.6% year-over-year to 236,600 in July, amid a surge in visitors from Australia, and lent support to the NZD/USD forex pair.
Brazil’s new car sales tumbled 7.3% to 225,400 units in August, signalling weaker consumer demand, which sent the BRL/USD pair lower in forex trading this morning.
Italy’s industrial production (1200 UAE Time) and 12-month BOT auction (1310 UAE Time), UK’s Treasury Gilt 2031 auction (1300 UAE Time), Germany’s 15-year Bund auction (1330 UAE Time), US MBA mortgage applications (1500 UAE Time), PPI (1630 UAE Time), wholesale inventories (1800 UAE Time), EIA crude oil stocks change (1830 UAE Time), EIA gasoline stocks change (1830 UAE Time), EIA distillate stocks change (1830 UAE Time), EIA heating oil stocks change (1830 UAE Time), 17-week Bill auction (1930 UAE Time) and 10-year Note auction (2100 UAE Time), Brazil’s inflation rate (1600 UAE Time), Canada’s 2-year Bond auction (2000 UAE Time), Russia’s inflation rate (2000 UAE Time), as well as Argentina’s inflation rate (2300 UAE Time).
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