European Markets Rise Ahead of French Confidence Vote Amid Budget Concerns

European Stocks Gain as Market Eyes French Political Developments

European equity markets opened the week with modest gains, driven by investor focus on France’s forthcoming confidence vote scheduled for later Monday. The U.K.’s FTSE 100 edged up 0.1%, Germany’s DAX rose 0.7%, and France’s CAC 40 increased by 0.4%, while Italy’s FTSE MIB declined 0.9% in early trading.

French Political Uncertainty Weighs on Sentiment

French Prime Minister Francois Bayrou has called for a confidence vote following intense political disputes surrounding his proposed fiscal strategy, which includes approximately €44 billion ($51.5 billion) in budget cuts. Bayrou aims to reduce France’s budget deficit to 4.6% by 2026, a figure that remains above the European Union’s stipulated limits. Opposition parties have challenged both the spending reductions and tax increases, fueling political instability.

Market participants widely anticipate Bayrou will lose the vote. Should this occur, President Emmanuel Macron will be compelled to appoint a fifth prime minister within less than two years, underscoring the ongoing volatility within French governance.

Corporate Moves and Regional Market Updates

On the corporate front, Dutch semiconductor giant ASML has reportedly committed €1.3 billion ($1.5 billion) to French artificial intelligence startup Mistral AI, which is conducting a €1.7 billion funding round. This substantial investment highlights growing interest in European AI ventures.

Separately, London-listed insurer Phoenix Group announced plans to rebrand as Standard Life, a longstanding brand in its portfolio, effective March 2026.

Global Economic Factors Influence Market Outlook

Across the Asia-Pacific region, markets traded mostly higher on Monday amid investor reactions to Japanese Prime Minister Shigeru Ishiba’s resignation announcement over the weekend. Attention also turns to key economic indicators emerging from the region.

In the United States, stock futures remained largely unchanged Sunday evening ahead of critical inflation reports scheduled for this week. The producer price index for August will be released Wednesday morning, followed by the consumer price index on Thursday. These inflation readings come after weaker-than-expected U.S. employment data on Friday, which has raised hopes that the Federal Reserve might consider easing interest rates at its upcoming policy meeting.

No significant European earnings or economic data releases are expected on Monday, leaving political developments and international economic signals as primary market drivers.