European stock markets are in widespread decline due to the crisis in France and the PSI is no exception

Black Tuesday for European markets, and the PSI was no exception. The Lisbon stock index fell -0.71% to 7,860.91 points, dragged down by the plunge in Mota-Engil shares (-3.82% to €4.838) and CTT (-3.10% to €7.49). CTT is among the biggest decliners on the PSI, after yesterday afternoon revealing that it will suspend parcel deliveries to the US due to the discontinuation of the duty-free regime on goods imported into the United States.

Another setback was the 2.21% drop in BCP shares to €0.7520, explained by the banking sector being the hardest hit in Europe, dragging sentiment across European stock markets. Banks felt the pressure from Paris and led the losses across Europe, MTrader analysts point out.

Corticeira Amorim also stands out among the PSI's losses, with a fall of -1.53% to 7.74 euros.

NOS received an upgrade from investment house Sadiff Investments (which now gives a target price of 3.544 euros), but it did not rise, as it lost 0.63% to 3.96 euros.

In a basket of 15 listed companies, only three closed higher (EDP Renováveis, EDP and Ibersol). EDPR rose +0.48% to 10.42 euros.

European stock markets closed lower on Tuesday, marked by political instability in France, after Prime Minister François Bayrou announced he would present a vote of confidence on September 8 in an attempt to support his budget proposals. The CAC 40 fell 1.64% to 7,714.15 points.

The French government is at risk of collapse with a budgetary confidence vote in September. The risky move could spell the end of its mandate and is already causing jitters in financial markets.

Brokerage firm XTB has conducted an analysis of European financial markets, which are experiencing significant declines, with Paris leading the losses, pressured by the political crisis in France and the risk of budgetary instability.

"France has also experienced growing uncertainty surrounding the country's assets. Added to this is the latest data, which reveals the sharpest rise in food prices since February 2024, reinforcing concerns," say XTB analysts.

The Stoxx 600 fell 0.80% and the EuroStoxx 50 lost 1.11%, closing at 5,383.7 points.

Looking at European markets, London fell 0.60% to 9,265.8 points; the German DAX lost 0.50% to 24,152.9 points; Milan closed down 1.33% to 42,654.95 points; the Spanish IBEX fell 0.96% to 15,119.3 points. Greece also saw a sharp decline of 1.87% and the Netherlands fell 0.68%.

What is certain is that the specter of economic failure hangs over the three major European countries (United Kingdom, Germany and France), which does not help sentiment.

The Sunday Telegraph reported warnings from leading economists that the UK is heading for a 1970s-style debt crisis and a bailout from the International Monetary Fund (IMF).

A former Bank of England official told the newspaper that borrowing costs in the UK are higher than in Greece and that there will be an economic collapse unless the Chancellor of the Exchequer reverses the situation.

UK Chancellor of the Exchequer Rachel Reeves has been advised to drastically cut public spending to prevent Britain from needing a financial bailout similar to that of the 1970s. Meanwhile, French Minister of Economy, Finance, Industrial Security and Digital, Eric Lombard, warned on Tuesday that there is a risk that the International Monetary Fund (IMF) will have to intervene in the economy if Prime Minister François Bayrou's minority government falls next month.

The German economy is also not doing any better, having contracted 0.3% in the second quarter compared to the first three months of the year. "The welfare state we have today can no longer be financed with what we produce in the economy," Merz said during a conference this week.

US tariffs and spending sprees are sinking the economies of all three countries, and this is reflected in the capital markets.

Across the Atlantic, durable goods orders in the US are believed to have increased 1.1% in July, showing signs of strength. Orders and equipment, a barometer of business renewal, also rose 1.1%, and shipments (important in calculating government GDP) grew 0.7%, according to MTrader. Shipments of non-defense capital goods, including aircraft, rose 3.3% in July.

In commodities, gold prices hit a two-week high in the early hours of Tuesday's session. Ricardo Evangelista, CEO of ActivTrades Europe, says this rise reflects the weakening of the US dollar and increased demand for safe-haven assets.

The euro advances 0.30% to 1.1653 dollars.

The debt market reveals a drop in German 10-year Bunds of 3.38 basis points to 2.72%. In contrast, UK debt is experiencing a surge in 10-year yields (+4.81 basis points to 4.74%).

Portugal has seen interest rates fall by 4.95 basis points to 3.15%.