European Markets Retreat Ahead of US Inflation Data: Key Takeaways for Investors (September 2025)

• Why Are European Markets Under Pressure Today?
• What Did the Swiss National Bank Decide?
• How Did US Economic Data Influence Markets?
• What's Behind France's Rising Debt Levels?
• What Should Investors Watch Tomorrow?
• Frequently Asked Questions

European stocks closed lower on Thursday as investors braced for crucial US inflation data, with disappointing corporate earnings adding pressure. The CAC 40 fell 0.41% while the EuroStoxx 50 dropped 0.51%, mirroring Wall Street's cautious mood. This article breaks down the market movements, Swiss National Bank's policy decision, France's rising debt, and what to watch in tomorrow's PCE inflation report.

Why Are European Markets Under Pressure Today?

European markets extended their losses for a second consecutive session on September 25, 2025, as investors digested mixed corporate earnings and positioned cautiously ahead of Friday's US PCE inflation data. The Paris CAC 40 slipped 0.41% to 7,795.42 points, while the broader EuroStoxx 50 declined 0.51% to 5,436.44 points. Across the Atlantic, the Dow Jones Industrial Average was down 0.31% around midday New York time.

Corporate earnings proved disappointing for several French companies. Quadient plunged after cutting its annual revenue target, while Beneteau sank following weak first-half 2025 results marked by declining sales and significant operating losses. On the bright side, Trigano led gains in the SBF 120 index after forecasting stronger activity for its 2025/2026 fiscal year.

What Did the Swiss National Bank Decide?

The Swiss National Bank (SNB) maintained its policy rate at 0% on Thursday, as widely expected. In their statement, policymakers noted: "Inflationary pressures have changed little since the second quarter." The central bank pledged to continue monitoring economic developments and adjust monetary policy as needed to ensure price stability.

However, the SNB warned that Switzerland's economic outlook has darkened due to recent US tariff hikes, which are expected to particularly impact exports and investments. The machinery industry and watchmaking sector appear most vulnerable to these trade headwinds.

How Did US Economic Data Influence Markets?

US second-quarter GDP surprised to the upside, growing at an annualized 3.8% pace versus the 3.3% economists had projected. This stronger-than-expected growth comes as Federal Reserve officials debate future rate cuts. San Francisco Fed President Mary Daly recently voiced support for last week's rate reduction, suggesting further easing might be needed to balance inflation control with labor market support.

All eyes now turn to Friday's PCE price index - the Fed's preferred inflation gauge - which could provide critical clues about the central bank's next moves. As one BTCC analyst noted, "The August PCE data will either validate the Fed's dovish tilt or force a reassessment of their policy trajectory."

What's Behind France's Rising Debt Levels?

French public debt climbed to 115.6% of GDP in Q2 2025, up from 113.9% in the previous quarter. Christophe Boucher of ABN Amro Investment Solutions explained this trend: "France's debt dynamics reflect both the substantial borrowing during the 2020 pandemic and persistent budget deficits since 2023, even during relatively favorable economic conditions."

While concerning, Boucher added these figures were largely anticipated and don't dramatically alter France's fiscal outlook. The numbers nonetheless highlight the challenges facing European governments in balancing stimulus needs with long-term debt sustainability.

What Should Investors Watch Tomorrow?

Friday's PCE inflation report (due at 8:30 AM ET) stands as the week's most critical economic release. Markets will scrutinize whether price pressures continue moderating enough to justify additional Fed easing. Other factors to monitor include:

• Potential spillover effects from US tariffs on European exporters
• Continued corporate earnings reactions
• Any shifts in market expectations for ECB policy

As one veteran trader quipped, "In this market, it pays to keep one eye on the data and the other on the exits." With multiple crosscurrents affecting asset prices, September's final trading sessions could prove particularly volatile.

Frequently Asked Questions

Why did European markets decline today?

European stocks fell due to disappointing corporate earnings and caution ahead of key US inflation data, with the CAC 40 dropping 0.41% and EuroStoxx 50 losing 0.51%.

What was notable about the Swiss National Bank's decision?

The SNB kept rates at 0%, citing stable inflation pressures, but warned that US tariff hikes are darkening Switzerland's economic outlook, particularly for export-focused industries.

How significant is France's rising debt level?

While concerning, analysts expected France's debt-to-GDP ratio reaching 115.6% in Q2 2025. The increase reflects both pandemic-era borrowing and recent budget deficits during relatively good economic times.

What's the most important data point coming Friday?

The August PCE inflation report (the Fed's preferred gauge) could significantly influence expectations for future US rate cuts and broader market direction.