Brent Crude Surges Past $100 as Europe Markets Plummet
Brent Crude oil futures surged past $100 per barrel on Wednesday for the first time since July, reaching an intraday high of $101.6 as tensions between the US and Iran escalated.
The sudden spike in energy prices sent shockwaves through European financial markets, with the STOXX Europe 600 index plummeting 1.41% to 640.4 points, its largest one-day decline since July. The eurozone's blue-chip STOXX 50 index fell 1.58% to 6,311.56.
The market is now pricing in four rate hikes from the European Central Bank and the Bank of England by the end of 2027, with approximately 60% odds of an additional fourth move. Germany's two-year government bond yield spiked to 3.08%, its highest level since June 2024.
However, a growing chorus of analysts is warning that rate-hike expectations may have gone too far. Bank of America strategists recommend clients trim their bets on ECB front-end rate hikes, citing the lack of evidence for broadening inflationary pressures and intensifying downside risks facing the eurozone economy.