Eurozone Stocks Stalled as Oil and Bond Yields Soar

European stock markets stalled this week as bond yields and oil prices rose, fueling concerns that energy-led inflation could keep eurozone interest rates higher for longer.

The spike in Brent crude above $95 a barrel was triggered by Middle East tensions, causing investors to wonder whether central banks might need to maintain tight policy. As a result, Germany's 10-year yield reached its highest level since April 2011, indicating that borrowing is becoming pricier across the economy.

This increase in yields also put pressure on stock valuations, as future profits are discounted at a higher rate. The European Central Bank's deposit rate expectations shifted, with markets now seeing a near 40% chance of a 3% rate by March 2027, up from 25% last week.

The strain was evident under the surface, despite the STOXX 600 being roughly flat at 647.87 and the DAX slightly lower. Media stocks fell 1.5%, while company news affected individual names like Nokia, which rose after index-inclusion news, and Lottomatica, which slid after announcing a takeover.