Tariff Shocks & Rate Jitters Ignite Wild 48 Hours in European Markets

Key Facts

Markets Whipsaw: European stocks hit three-week lows on Sept. 25, then rebounded on Sept. 26. The pan-European STOXX 600 fell 0.7% Thursday – its lowest in three weeks – before bouncing ~0.3% Friday ^[1] ^[2]. Major indices like Germany’s DAX and France’s CAC 40 dropped ~0.5% Thursday, then recovered by Friday (DAX +1.3%) ^[3].
Trump’s Tariff Bombshell: Late Thursday, U.S. President Donald Trump announced sweeping new tariffs – 100% duties on branded drugs and 25% on heavy trucks, plus levies on furniture and fittings, effective Oct. 1 ^[4]. Uncertainty over these trade salvoes rattled healthcare stocks and automakers across Europe ^[5] ^[6]. Shares of pharma giants like Roche, AstraZeneca, Novo Nordisk and Novartis slumped ~2% on the news ^[7], while truck-makers Daimler Truck and Traton fell ~2% ^[8].
Central Bank Caution: Investors grappled with interest rate outlooks. A Bank of England official warned UK inflation could stay stronger than forecast, urging caution on further rate cuts ^[9]. The BoE had just paused easing after cutting rates in August amid 3.8% inflation (highest in G7) ^[10]. The European Central Bank (ECB) and Swiss National Bank held rates steady in September, with the SNB even flagging U.S. tariff risks to the 2026 outlook ^[11]. Meanwhile the U.S. Federal Reserve’s first 2025 rate cut in mid-September lifted sentiment, but Fed officials’ hawkish comments this week tempered hopes of rapid easing ^[12].
Economic Data Surprises: Fresh data painted a mixed picture. Germany’s consumer confidence ticked up for October (GfK index –22.3 vs –23.5 prior) ^[13], and Spain’s Q2 GDP beat forecasts at +0.8% QoQ ^[14], signaling resilience. France’s consumer sentiment stayed stuck at a weak 87 in September ^[15]. In the UK, a retail survey warned of falling sales ahead – “weak demand continues to weigh on sales, while US tariffs are adding pressure” for retailers, according to the CBI ^[16].
Sectors & Standouts:Healthcare/Med-Tech stocks led declines Thursday (STOXX healthcare –1.9% ^[17]) after the U.S. opened import probes into medical equipment and robotics, hitting Siemens Healthineers (–3.4%) and Philips (–3%) ^[18]. Financials and Industrials then led Friday’s rebound – insurers jumped +1.2% ^[19], construction rose +0.8% ^[20], and steelmakers surged as the EU moved to slap 25–50% tariffs on Chinese steel imports ^[21]. Energy stocks got a lift from oil’s 4% weekly price jump amid Russian export curbs and supply tightness ^[22]. Defence firms remained near record highs after mid-week gains (Rheinmetall, SAAB +3–8% on Wednesday) ^[23]. On the upside, consumer stocks saw bright spots: Sweden’s H&M soared 9.8% on a surprise profit beat ^[24], and UK miner Rio Tinto jumped 3.5% tracking copper’s rally ^[25].

German DAX index graph at the Frankfurt Stock Exchange, reflecting volatile mid-week trading ^[26].

Pan-European Overview: From Slump to Rebound

European equities seesawed over the two days, buffeted by transatlantic trade tensions and shifting rate expectations. On Thursday Sept. 25, the STOXX Europe 600 index dropped 0.7%, touching levels not seen in three weeks ^[27]. Almost every major bourse closed in the red ^[28] as traders digested a slew of worrying signals: fresh U.S. trade investigations into high-tech imports, surprisingly robust U.S. economic data, and guarded comments from central bankers. By Friday Sept. 26, however, markets regained footing – the STOXX 600 ticked up roughly +0.3% by midday ^[29] and was on track to finish the eventful week slightly higher ^[30]. The late-week relief came as investors pivoted to bargain-hunting in financial and industrial shares and awaited key U.S. inflation data (the Fed’s PCE index) for clues on interest rates ^[31].

Trade war tremors from Washington cast a long shadow. Trump’s late-Thursday tariff bombshell – 100% duties on imported branded pharmaceuticals and 25% on heavy trucks ^[32] – sent shockwaves through Europe’s healthcare and auto sectors. Markets had braced for some pharma tariffs after months of threats, but the breadth of the measures was jarring. “The uncertainty in the near term could weigh on share prices,” cautioned Morningstar’s Lorraine Tan, adding she expects the final tariff rate may be negotiated lower given past patterns ^[33]. Analysts noted that Asian generic drugmakers might escape damage, but European pharma is directly in the crosshairs since the EU supplies ~60% of U.S. pharma imports ^[34]. Citi strategist Ken Peng warned the biggest losers “could be people who need medicine” if 100% levies drive up drug costs ^[35] ^[36]. The tariff salvo also included trucks and consumer goods (e.g. 25% on trucks, 30% on furniture) ^[37], leaving European exporters on edge as it’s unclear if trade-deal partners like the EU or UK will be exempt ^[38].

Meanwhile, investors were also parsing signals from central banks and economic data. Fed officials in the U.S. struck a cautious tone about further rate cuts, after a strong revised GDP reading underscored a resilient economy ^[39]. In Europe, the ECB had stood pat on rates at its latest meeting, and Switzerland’s central bank held rates at 0% – even flagging that U.S. protectionism threatens the outlook ^[40]. The Bank of England similarly paused easing this week. BoE Monetary Policy Committee member Megan Greene warned UK inflation might prove stickier than hoped, “meriting a cautious approach” to additional cuts ^[41]. With inflation around 3.8% (highest among G7 nations) and expected to peak at 4% in September, the BoE must balance price risks against an “uncertain growth and jobs outlook” ^[42]. Market participants responded by trimming bets on near-term easing: futures showed reduced odds of an October Fed rate cut after U.S. jobless claims came in lower than expected ^[43]. In Europe, most big banks (Goldman, Citi, JPMorgan) now predict no further BoE cuts in 2025 after this week’s hold ^[44], and the ECB has signaled it will be patient following its success in bringing inflation near target ^[45]. This backdrop of “rate jitters” kept equity gains in check, even as easing cycles tentatively begin.

All told, the last two sessions of the week encapsulated the push-and-pull in Europe’s markets: optimism from easing inflation and strong corporate earnings on one side, versus anxiety over geopolitics and policy on the other. “Post the most recent Fed moves, the market has coalesced around a scenario of no recession – and I think that view also holds in Europe,” noted Ben Lambert of Ninety One, pointing to improving sentiment ^[46]. Yet traders remained hypersensitive to headlines. Every data release and tariff tweet triggered recalibrations in expectations, leading to abrupt sector rotation. The result was a volatile but ultimately range-bound market: even after the rollercoaster, the STOXX 600 was still up about 9% year-to-date (trailing the S&P 500’s +13%) ^[47] ^[48], and sat just a couple percent below its 2025 highs.

United Kingdom: FTSE 100 Hit by Inflation Fears and Healthcare Slide

In London, the FTSE 100 spent the two days on the back foot amid local inflation worries and spillover from the global healthcare rout. The blue-chip index fell 0.4% on Thursday (its sharpest drop in a week) ^[49], and the mid-cap FTSE 250 shed 0.5%. Investors were unnerved by Bank of England signals that policy easing might pause longer than expected. On Wednesday, new BoE member Megan Greene cautioned that UK inflation could prove stronger than forecast, implying the Bank must go slow on rate cuts ^[50]. With Britain’s CPI far above target, the BoE’s widely expected hold this week (after an August cut) was accompanied by a hawkish tone. U.K. gilt yields climbed in tandem with U.S. Treasury yields after revised U.S. GDP came in hot, underscoring that global borrowing costs may stay higher for longer ^[51]. Rate-sensitive sectors in the UK – like homebuilders and utilities – were under pressure as a result.

Adding to London’s woes was a sharp selloff in healthcare and medical stocks. The FTSE’s health-related names sank ~1.8% as a group ^[52], mirroring the Europe-wide med-tech slide. Medical equipment maker Convatec plunged 5.6% ^[53] after the U.S. launched national security probes into imports of medical gear and other tech, a move seen as potentially leading to trade restrictions ^[54]. Fellow medtech firm Smith+Nephew fell ~1.2% ^[55]. Pharma giant AstraZeneca also dropped ~2% intraday (it ended –0.7% Thursday) as Trump’s tariff threats loomed ^[56]. The trade uncertainty weighed on UK sentiment broadly, given Britain’s large pharmaceuticals industry. The tariffs on trucks even hit industrial names – e.g. Melrose Industries (owner of automotive supplier GKN) slid almost 3% Thursday as investors assessed exposure to U.S. truck markets (Daimler Truck’s selloff was a warning sign ^[57]).

Some idiosyncratic corporate moves drove notable stock swings in London. Petershill Partners, an investment firm backed by Goldman Sachs, saw its stock rocket 34% after announcing plans to delist from the LSE due to dissatisfaction with its valuation ^[58]. The news fed into a growing narrative of UK-listed companies seeking exits or foreign listings to capture higher multiples. By contrast, pub operator Mitchells & Butlers plummeted 8.5% on Thursday after reporting disappointing fourth-quarter sales growth, highlighting consumer spending pressures ^[59]. Retailers are increasingly gloomy: a Friday survey by the CBI showed UK retail sentiment at -43% for next month – “lacklustre economic conditions” and the prospect of higher import costs from U.S. tariffs are adding pressure ^[60] ^[61]. U.K. August retail sales did improve modestly (helped by summer weather) ^[62], but forward-looking indicators like the CBI survey point to renewed weakness.

The FTSE 100 attempted a mild rebound on Friday Sept. 26, closing up around +0.2% (roughly 9,235) as oil majors and banks gained ground ^[63]. Energy stocks got a lift from Brent crude’s rise to ~$69.5, driven by supply cuts in Russia ^[64]. Miner Rio Tinto extended its rally, finishing the week +3.5% from Wednesday’s close thanks to surging copper prices ^[65]. But overall, London’s market lagged the continental rebound. Ongoing concerns about the UK’s fiscal and inflation outlook capped the FTSE’s gains. A report mid-week showed Britain’s public borrowing overshooting forecasts, stoking fiscal jitters about the government’s budget plans ^[66]. The British pound also slumped to a multi-month low, reflecting worries that UK policymakers have limited room to stimulate growth ^[67] ^[68]. By week’s end, the FTSE 100 posted a slight weekly decline, underperforming Eurozone peers.

Germany: DAX Rebounds as Autos and Med-Tech Swoon, Banks Bounce

Germany’s DAX 40 index navigated dramatic sector swings, ultimately reversing its mid-week losses by Friday’s close. On Thursday the DAX sank about –0.6% ^[69], dragged down by a rout in med-tech and industrial names. Medical technology leader Siemens Healthineers tumbled 3.4% ^[70] after the U.S. import inquiry into medical devices raised the specter of trade curbs. The Trump tariff shock added insult to injury: shares of German pharma and biotech firms (Merck KGaA, Bayer) fell ~1–1.5% in early Friday trading ^[71] on news of the 100% U.S. drug duties. The auto sector also faltered. Auto parts supplier Adidas (diversified consumer giant) and tire maker Continental were among Thursday’s losers ^[72]. Truck-maker Daimler Truck Holding plunged over 3% across Thu–Fri after Trump targeted imported heavy trucks with 25% tariffs ^[73]. Even Siemens Energy saw its shares slide amid broader industrial weakness and lingering concerns about its wind-turbine unit’s troubles ^[74].

Yet by Friday, the DAX staged a robust rebound, climbing roughly +1.3% (its best day in weeks) ^[75] as bargain hunters swooped in. Financials led the charge: Deutsche Bank and Commerzbank rose ~1%+ each ^[76], tracking a Europe-wide bank rally. Rising bond yields actually buoyed bank stocks on hopes for improved lending margins. Insurer Allianz also gained nearly 1% ^[77]. Another catalyst was the European Commission’s reported plan to impose hefty tariffs on Chinese steel imports (25%–50%) – a move cheered by German steelmakers. Shares of Thyssenkrupp jumped ~1.3% and Salzgitter over 2.5% after a German business daily broke the news of potential steel duties ^[78]. The prospect of trade protection sent steel prices (and European steel stocks) higher, offsetting some of the trade-war gloom from the U.S. side.

Importantly, German economic data offered a glimmer of optimism. GfK’s forward-looking consumer confidence index for October improved to –22.3 from –23.5, halting a long decline ^[79]. While still deeply negative, the uptick suggests German households are slightly less pessimistic, thanks in part to easing energy prices and hopes that a recession will be avoided. Business sentiment remains fragile – surveys show manufacturing is still contracting – but fiscal stimulus is on the horizon. On Thursday, Germany’s parliament approved the first post-“debt brake” budget, boosting spending for 2025 ^[80]. Hopes are rising that government stimulus and resilient employment will shore up growth. “Even now that budgets for 2025 and 2026 have passed, it will take time for spending to ramp up,” observed Capital Economics’ Franziska Palmas, tempering expectations ^[81]. Still, the mere prospect of fiscal support helped lift construction stocks and automakers on Friday.

By the end of Friday, the DAX was flirting with 15,800 – essentially flat on the week, but well off its mid-week trough. Notably, one of the biggest individual stock moves in Germany came from outside the benchmark index: tire and auto parts maker Continental AG saw its shares skyrocket 29% on Thursday outside market hours, after it spun off its automotive division Vitesco (now renamed Aumovio) in a separate listing ^[82]. This spin-off rally, while technical, underscored the hidden value investors are seeking in Europe. “More companies and boards [will] step out and try to do things…like we’re seeing in rail,” said Goldman Sachs President John Waldron, alluding to consolidation moves and spinoffs as catalysts for value ^[83] ^[84]. Such corporate actions, along with easing central bank fears, could sustain the DAX’s momentum into next week if macro risks don’t intrude again.

France: CAC 40 Weighed by Luxury & Pharma, While Industry Mixed

France’s CAC 40 index mirrored the broader European pattern: a dip on Thursday followed by a modest recovery Friday. The CAC 40 fell around –0.4% on Sept. 25 ^[85]. Losses were led by healthcare and industrial giants. Pharmaceutical heavyweight Sanofi dropped about 2.5% ^[86] amid the U.S. tariff furor and after a U.S. court ruling in a patent case (earlier in the week) added pressure on its stock. Luxury goods makers – a major component of the CAC – also struggled. Market bellwether LVMH extended its recent slide on Thursday (luxury stocks’ sub-index was –1.5% mid-week ^[87]) as concerns lingered about slower demand in China and high interest rates cooling affluent spending. Rival Kering ended the day down over 2% ^[88]. In the aerospace sector, Safran and Airbus saw mild declines, reflecting global growth worries.

French auto-related stocks faced cross-currents. On one hand, EV battery maker STMicroelectronics (which supplies the auto industry) fell ~2.6% ^[89], and tire maker Michelin slid, hurt by higher raw material costs and the specter of U.S. auto tariffs. On the other hand, Renault shares climbed nearly +1.7% ^[90], bucking the trend. The carmaker announced it would maintain its dividend and saw broker upgrades, which helped its stock rise even on Thursday’s down day. Also, France’s construction materials firm Saint-Gobain dipped ~2%, possibly on worries of higher interest rates damping construction demand ^[91].

By Friday Sept. 26, the CAC 40 regained about +0.8% ^[92] as sentiment stabilized. Financials provided support – Société Générale and Crédit Agricole notched gains (~+1%) after bond yields hit multi-year highs, which can benefit bank margins ^[93]. Utilities like Engie also rose on hopes that peak rates are near. Notably, shares of Euronext Paris got a lift from the successful IPO of Birkenstock in New York and anticipation of more listings activity in Europe following the week’s big IPO news in Stockholm (the NOBA debut). A bright spot in France’s tech scene has been semiconductor company Soitec, which jumped mid-week on strong results, illustrating the resilience of Europe’s chipmakers amid the AI boom.

France’s macro backdrop remains one of cautious households and political uncertainty. The latest INSEE survey showed French consumer confidence stuck at 87 in September – the joint-lowest in nearly a decade ^[94]. Stubborn inflation (still ~4.9%) and worries about political stability (after summer riots and ahead of 2027 elections) have kept consumers gloomy. Government efforts to cap energy prices and boost purchasing power continue, but as one Paris analyst noted, “there’s a limit to how much fiscal sweeteners can do if the outlook is clouded by global trade tensions.” For now, the CAC’s heavyweights in luxury and banking mean it remains highly sensitive to U.S.-China trade news and ECB policy signals. With both those factors in flux, the CAC 40’s late-week bounce could quickly be tested in coming sessions. Still, it closed the week near 7,200, down only slightly on the week and up about 10% year-to-date – a sign that investors see value in France’s blue chips if external headwinds abate.

Southern Europe: Spain & Italy – Resilience Amid Challenges

Spain’s IBEX 35 and Italy’s FTSE MIB followed the broader European trajectory, ending the week with only minor changes after a volatile mid-week. On Thursday, Spain’s IBEX fell roughly 0.7%, and Italy’s MIB about 0.6%, as rate fears and the med-tech selloff hit Southern European markets that had been outperforming earlier in the month ^[95]. Spanish stocks took a hit from global cues, but Spain got a dose of good news Friday: second-quarter GDP grew 0.8% (quarter-on-quarter), beating forecasts and accelerating from Q1 ^[96]. This stronger-than-expected growth – driven by rebounding tourism and exports – underscores Spain’s status as one of the Eurozone’s more robust economies this year. Banking stocks, which carry heavy weight in the IBEX, responded positively. Industry leader Banco Santander edged higher as Spain’s economic prospects brightened, and bond yields rising globally also bolster bank earnings. However, Spain’s gains were tempered by a continued slump in Telefonica, the telecom giant, which faces regulatory uncertainty around a stake sale to Saudi Arabia’s STC. Also, energy company Repsol got a boost from higher oil prices, aiding the IBEX on Friday.

In Italy, the FTSE MIB struggled on Thursday but bounced on Friday alongside peers. Italy’s market was pulled down by the European healthcare rout – Milan-listed pharma group Recordati and diagnostics firm DiaSorin both fell ~2–3% on the U.S. tariff news. Industrial stocks were mixed: Stellantis (the auto giant spanning Fiat and Peugeot) saw its shares dip about 2% in Paris and Milan on Thursday ^[97], as investors weighed the impact of lower U.S. auto tariffs that were implemented this week (the U.S. cut its tariff on EU car imports to 15% from 25% effective Aug. 1) ^[98]. While lower U.S. tariffs are a positive for Stellantis and European automakers, the news was already expected and thus provided little immediate boost. Italian luxury sports carmaker Ferrari held steady, showing resilience thanks to its unique market positioning and a recent analyst upgrade on its EV strategy.

One eye-catching mover in Italy was luxury fashion house Brunello Cucinelli, whose stock plunged 17% on Thursday ^[99]. A short-selling firm, Morpheus Research, announced it had taken a short position on Cucinelli, arguing the high-flying luxury brand was overvalued. The news sparked a selloff – a rare event for a company that had been a market darling amid the global luxury boom. This single-stock drama weighed on Italy’s consumer goods sector, though other Milan-listed luxury names (like Moncler) were more stable. By Friday, bargain hunters stepped in: Cucinelli recouped a few percentage points, and the MIB index climbed about +0.5%. Italy also saw the release of new confidence data: September business confidence ticked up to 87.5 (from 87.4) and consumer confidence held at 96.2 ^[100] ^[101]. These steady readings suggest that Italian firms and households are cautiously weathering the high-rate environment, neither significantly improving nor deteriorating in outlook. With Italy’s borrowing costs elevated, the government in Rome is treading carefully on spending – but an expected credit rating outlook boost from Fitch (due to political stability and fiscal discipline) could further support Italian financials ^[102].

By the week’s end, Spain’s IBEX 35 and Italy’s FTSE MIB were little changed from a week prior, reflecting a balance of positives and negatives. Southern Europe’s high debt levels mean these markets are highly sensitive to interest rate expectations. It was therefore a relief for them that the ECB stayed on hold and the Bank of England’s pause hinted at peak rates. Any sign of global yields pulling back could particularly benefit Italian and Spanish equities going forward. For now, solid economic growth in Spain and Italy’s progress on fiscal and reform measures (under EU recovery funding) are providing a floor under their markets in the face of external turbulence.

Netherlands & Nordics: AEX Dips on Tech Drag; Stockholm Shines with IPO

The Amsterdam AEX index and Nordic bourses had divergent fortunes during the week’s turbulence. The Dutch AEX, heavy on tech and semiconductor names, struggled amid global tech weakness and the med-tech selloff. On Thursday, the AEX slid about 0.8%. A key drags was healthcare tech conglomerate Philips, whose shares fell over 3% after the U.S. announced its probe into medical device imports ^[103]. Philips has significant U.S. exposure (it’s a top maker of medical scanners and equipment), so the trade uncertainty hit hard. The company is also still navigating a massive recall of respiratory devices, so any added headwinds were unwelcome. Semiconductor equipment maker ASML Holding, one of Europe’s most valuable tech firms, also eased lower during the week – reflecting some profit-taking after a strong year and concerns that higher U.S. bond yields could temper the exuberance in tech stocks. Even so, ASML remains up ~20% in 2025 thanks to surging chip demand for AI, and it announced a new share buyback that cushioned the decline.

Dutch economic news was relatively light, but the Netherlands did elect a new parliament this week, potentially bringing a rightward shift in policy. However, coalition talks will take time, and markets largely shrugged off the election results, focusing instead on international developments. By Friday, the AEX ticked up about +0.3% alongside broader Europe. Oil giant Shell, a major AEX component, rose in step with oil prices, and Dutch banks like ING gained modestly. The AEX ended the week roughly flat, showing resilience despite its tech slump.

In the Nordics, Sweden’s OMX Stockholm 30 index stood out with pockets of strength. On Thursday, as most of Europe sank, Stockholm’s exchange saw a nearly 10% surge in retail fashion behemoth H&M – its stock’s best jump in years. H&M posted a far stronger Q3 profit than expected, thanks to improved inventory management and solid summer sales, sending shares up 9.8% ^[104]. This single-stock gain helped limit the OMX30’s decline on Thursday to around –0.5%. The Nordic tech scene also got a boost from an exciting IPO: Digital bank NOBA made its debut on Friday in Stockholm and immediately soared +27% above its IPO price ^[105] ^[106]. NOBA’s successful $4.7 billion listing – the second major Swedish fintech to go public this year, after Klarna’s U.S. listing – is a vote of confidence in the region’s capital markets. It “had been multiple times oversubscribed by investors” ^[107], signaling strong appetite for growth companies. NOBA’s pop lifted sentiment for financials, and Nordic banking shares broadly moved higher Friday.

Elsewhere in the Nordics, defense and commodity stocks provided support. Sweden’s SAAB and Britain’s BAE Systems (which trades in Stockholm via depositary) remained near all-time highs after rallying earlier in the week on increased defense spending and Trump’s pro-Ukraine comments ^[108]. In Norway, energy companies like Equinor climbed as Brent crude’s rally continued. The Nordic economies also saw central bank action: Norway’s Norges Bank cut rates by 25 bps this week, joining the Fed in easing policy ^[109] ^[110]. That move weakened the krone and gave a mild boost to Oslo’s stock index. Finland and Denmark’s markets were quieter, though Finnish forestry firms got a lift from a tentative resolution to UPM’s labor disputes.

By the end of Friday, the OMX Stockholm 30 had recouped its losses, thanks to H&M’s surge and a general risk-on shift. The Nordic region’s reputation as a growth hub was underscored by UBS strategist Kiran Ganesh’s comment that “the tech story remains really important… There’s so much investment going into this space” ^[111]. Indeed, Nordic tech and fintech are attracting global interest, as seen with the NOBA IPO and ongoing M&A buzz (e.g. Ericsson’s name swirling in 5G consolidation talks). The week closed with Stockholm’s index roughly unchanged, while Amsterdam’s AEX was off a tad – both markets proving comparatively resilient in the face of external shocks.

Expert Outlook: Cautious Optimism Despite Volatility

Market strategists note that despite the choppiness, Europe’s equities are still on an upward trajectory for the year, supported by decent earnings growth and fading inflation. The wild swings from Sept. 25–26 highlight how quickly sentiment can shift on news headlines. However, many experts advise investors to look through short-term noise. Goldman Sachs President John Waldron said this week that he is “more than cautiously optimistic” on the outlook, citing robust economic fundamentals and an expected pickup in corporate dealmaking as rates ease ^[112] ^[113]. He pointed to a flurry of consolidation (like a recent $85 billion U.S. rail merger) as evidence that CEOs are gaining confidence to pursue transformative deals ^[114]. Lower capital costs from central bank rate cuts will “provide more impetus to dealmaking” and could especially benefit Europe, where equity valuations remain cheaper than the U.S. ^[115].

Economists also emphasize that Europe may sidestep recession even as growth slows. “The market has coalesced around a central scenario of no recession,” noted Ninety One’s Lambert, reflecting a prevailing view that the Eurozone will see sluggish but positive growth ^[116]. Key risks remain – particularly high oil prices, which could reignite inflation, and U.S. political uncertainty (a looming government shutdown or escalation in trade tensions). Yet, after this week’s drama, investors appear somewhat inured: Euro STOXX volatility indexes rose only moderately.

Heading into October, attention will focus on inflation reports and central bank meetings. The ECB’s next decisions and any signals from the Bank of England will be critical in setting the tone. Also, Europe’s ability to navigate geopolitical storms – from the war in Ukraine (where some see hopeful signs of stability) to U.S.-China trade frictions – will be tested. So far, European corporates have proven adaptable, whether via diversifying supply chains or passing on costs to consumers.

As one London trader quipped, “We got a bit of everything this week – a tariff shocker, a growth upside surprise, and even an IPO pop – yet the market took it on the chin” ^[117] ^[118]. This resilience underlines a cautious optimism: if Europe can weather such 48-hour storms with only minor bruises, it bodes well for the final quarter of 2025. Analysts expect volatility to stay elevated, but many see pullbacks as buying opportunities in sectors like finance, industrials, and even selectively in beaten-down healthcare (assuming trade tensions cool). With valuations still appealing and central banks nearing the end of tightening, Europe could be on the cusp of a more sustained rally – provided no new shocks upset the fragile equilibrium forged during this wild week.

Sources: European stock market reports and data from Reuters, Nasdaq/RTT News, Investing.com, and official economic releases ^[119] ^[120] ^[121] ^[122] ^[123], commentary from financial strategists and economists ^[124] ^[125], and statements from industry experts and officials ^[126] ^[127]. This roundup is based on market developments and news reports from Sept. 25–26, 2025.