Oil Price Surge Sparks Longest Losing Streak for Eurozone Equities

The ongoing U.S.-Iran standoff has caused oil prices to surge, leading to inflationary pressures across the eurozone. The pan-European STOXX 600 index closed lower for a seventh consecutive session, its longest losing streak since September 2023. Energy stocks gained 0.9% as oil prices climbed, while travel and leisure shares fell 0.7% due to fuel-cost concerns.

European indices were mixed, with Germany's DAX index dropping 0.42%, France's CAC 40 falling 0.57%, and the UK's FTSE 100 inching up 0.04%. Brent crude futures climbed roughly 2% to trade near $93 per barrel, reigniting inflation concerns.

Swissquote senior analyst Ipek Ozkardeskaya noted that the U.S. Treasury's move to support longer-dated government bonds could support European bonds over the longer term, but market focus is likely to return to near-term risk factors once the initial reaction fades.

The decline in energy prices in July has already proven to be temporary, and with the Middle East situation unlikely to be resolved in the short term, inflation risks remain tilted to the upside. Germany's July producer price index rose 3.0% year-over-year, exceeding market consensus of 2.7%, driven primarily by higher intermediate goods and energy costs.