European markets on Tuesday (Oct 7) showed resilience, with the Stoxx Europe 600 index ending largely flat, as offsets between political turmoil in France and strength in tech and semiconductor stocks kept volatility in check.

Markets were initially rattled by news that French Prime Minister Sébastien Lecornu abruptly resigned just hours after naming his cabinet, triggering one of France’s steepest one-day drops in equities in over a month. The CAC 40 plunged around 1.4%, banks and luxury names notably hit.

However, gains in semiconductor names injected support into the broader market. Stocks such as ASML and Besi saw strong gains fueled by optimism around the recent OpenAI–AMD chip partnership news, which bolstered sentiment across tech-adjacent sectors.

In Germany, the DAX held relatively steady, with export names seeing cautious support, while FTSE 100 in the U.K. also traded with modest gains, underpinned by commodity and defensive sectors.

Investor focus remained split: on one side, concern over Europe’s second-largest economy enduring repeated government collapses and fiscal stress. On the other, hopes that Europe is repositioning for a rebound, aided by monetary easing, corporate earnings, and reduced U.S. dollar pressures.

Analysts note that additional catalysts—such as further tech deal news, bond yields, and any clarity in the French political saga—could drive direction from here. With markets already pricing in much of the upside, staying nimble and watching risk areas is key.