This morning, European markets started off on a positive note : most major indices opened higher, with futures trading in the green. However, momentum quickly faded as fresh data from Germany weighed on sentiment. Industrial production plunged by 4.3% in August 2025 compared to the previous month, and by 3.9% year-on-year : the sharpest monthly drop since 2022. The figures highlight how fragile Europe’s economic recovery remains, and investors are still digesting the implications.

Adding to the pressure, political tensions in France continue to unsettle markets. Concerns about the government’s stability are dragging down not only French equities but also sentiment across Germany and the wider eurozone. Economically sensitive and industrial stocks are likely to face further downside pressure, while defensive sectors, consumer staples, and software-oriented companies may show more resilience.

Investors are closely watching comments from ECB officials, signals around interest rates and inflation trends in both Europe and the U.S., as well as the upcoming earnings season. If positive surprises emerge, the more volatile sectors could stage a rebound. However, if macro indicators keep weakening, markets may enter another phase of correction or indecision.