European markets closed firmly in the red, with major benchmarks posting their weakest daily performance in recent sessions as investors reduced exposure ahead of rising macro and political uncertainty. Losses were broad-based across core eurozone indices, while currency markets remained relatively stable, underscoring equity-specific pressure rather than systemic stress.

Core European Indices Lead the Downturn

The selloff was most pronounced in the eurozone’s heavyweight indices. France’s CAC 40 fell 1.88% to 8,103.67, while Germany’s DAX declined 1.26% to 24,977.71, reflecting weakness in industrials, autos, and global exporters. The EURO STOXX 50 dropped 1.69%, signaling a coordinated retreat from large-cap European stocks. These moves suggest investors are reassessing growth-sensitive exposures amid renewed uncertainty around global trade dynamics, monetary policy trajectories, and geopolitical risks. Defensive sectors provided limited shelter, indicating a broad risk-reduction move rather than targeted rotation.

France and Benelux Markets Underperform

Beyond the core indices, regional benchmarks also showed notable weakness. The Euronext 100 Index slid 1.85%, mirroring declines across France, the Netherlands, and Belgium, while the FTSE 100 fell 0.40%, outperforming peers but still ending firmly lower. UK equities were partially cushioned by their higher exposure to energy and defensive names, though the broader European trend remained negative. The scale of the declines suggests institutional selling rather than retail-driven volatility, with investors trimming exposure to continental Europe after recent gains.

Currency Stability Signals Equity-Led Pressure

Despite the sharp equity losses, currency markets showed relatively muted moves. The Euro Index edged down 0.11%, while the British Pound Index was effectively flat, highlighting that capital flight from European assets has not yet translated into aggressive currency repositioning. This divergence indicates that today’s move was driven more by equity valuation concerns and profit-taking than by fears of monetary instability. The MSCI Europe index closed marginally lower overall, reflecting how losses were concentrated in large-cap benchmarks rather than across the full market spectrum.

Looking ahead, investors will closely monitor upcoming economic data releases, central bank communication, and geopolitical developments that could either stabilize or further pressure European equities. Any signs of slowing inflation without a sharp growth deterioration could help restore confidence, while renewed trade or political tensions may extend downside risk. For global and Israeli investors, Europe’s performance remains a key barometer for risk appetite, particularly given the region’s sensitivity to external demand and policy uncertainty. In the near term, volatility is likely to persist as markets reassess valuation levels and macro assumptions before establishing a clearer directional trend.