European Markets Mixed Ahead of US Jobs Data and Political Uncertainty in France and Germany

European markets are mixed ahead of US jobs data, which could prompt the Federal Reserve to make its first interest rate cut. Political uncertainty in France and Germany threatens the stability of both governments. Italy's Mib index is up 0.1%, while Paris's CAC 40 is down 0.1% and Frankfurt's DAX 40 is up 0.2%. Among decliners, Eni fell 1.8% and Stellantis shares closed down 2.7%.

Title: Political Uncertainty and Economic Challenges in Thailand

Thailand is grappling with economic challenges amidst political uncertainty, according to recent reports. Experts predict a potential 0.5% interest rate cut from the Bank of Thailand (BOT) in October, as political turmoil threatens to disrupt the country's economic growth momentum. The removal of Paetongtarn Shinawatra as Prime Minister by the Constitutional Court has led to increased competition between Pheu Thai and Bhumjaithai parties to appoint a new Prime Minister [1].

Economists are concerned that political instability could lead to a House dissolution, potentially delaying essential policy implementations and hindering economic growth. Thailand's economy is under pressure from US President Donald Trump's tax policies and border clashes with Cambodia. The government estimates that economic growth in 2025 will average just 2%, significantly lower than neighboring countries like Indonesia and the Philippines [1].

The Monetary Policy Committee (MPC) of the BOT has reduced the policy interest rate by 1.0% since October 2025, bringing it down to 1.5%. However, experts predict further rate cuts if there are signs of a significant slowdown in economic growth or unexpected shocks. Krystal Tan, economist at ANZ Bank, predicts a 0.25% cut in Q4 2025, while Tim Leelahaphan of Standard Chartered Bank expects a 0.5% cut in October due to political uncertainty [1].

Nomura Holdings Inc. has warned that Thailand's credit rating may be downgraded by Moody's in the coming quarters, citing growing political uncertainty and ongoing economic stagnation. Moody's has already lowered its outlook on Thailand's credit rating from stable to negative, citing US import tariffs and rising global uncertainty [1]. The political volatility and frequent changes in leadership are holding back investment and hindering essential structural reforms.

Despite these challenges, the House of Representatives passed the 2026 fiscal budget of 3.78 trillion baht on September 1, which is expected to alleviate investor concerns over potential budget delays. S&P Global Ratings noted that the political volatility should not significantly impact Thailand's credit outlook, as the bureaucratic system is expected to maintain national stability [1].

However, ongoing trade negotiations between Thailand and the US could be affected by political unrest, particularly if there is a House dissolution. Burin Adulwattana of Kasikorn Research Centre warned that Thailand's economy could face setbacks across multiple areas if political paralysis ensues [1].

Amonthep Chawla of CIMB Thailand warned that Thailand's credit rating could be downgraded amid ongoing political instability and stagnant economic growth. He explained that the current political situation, coupled with Thailand’s economic slowdown, presents risks to the country’s credit outlook. While Moody's has not yet made any drastic moves, the ongoing political uncertainty could lead to a negative outlook on Thailand’s economy [1].

References:
[1] https://www.nationthailand.com/business/economy/40054896
[2] https://www.ainvest.com/news/deutsche-bank-ceo-christian-sewing-warns-elevated-bond-yields-persist-political-uncertainty-2509/