Europe Markets Weekly — 2026-03-22

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Market Snapshot

• STOXX 600: Third straight weekly decline, longest losing streak in nearly a year
• DAX: Fell with broader European markets as Middle East tensions weighed on sentiment
• FTSE 100: Declined on Friday after opening in positive territory; dragged by rising oil fears and rate-hike bets
• CAC 40: Fell alongside regional peers amid Iran conflict spillover and energy price spikes

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Key Drivers

• Middle East conflict dominates sentiment: European stocks slumped over 2% on Thursday alone after attacks on Iranian and Qatari energy infrastructure deepened the regional crisis. The pan-European STOXX 600 posted its third straight weekly loss — the worst stretch in close to a year — as the deepening conflict stoked inflation fears and renewed bets for interest-rate hikes.

• ECB and BoE hold rates; hawkish tone rattles equities: The ECB kept its deposit rate on hold at 2% and the Bank of England left its benchmark rate unchanged at 3.75% on Thursday. The decisions themselves were widely expected, but President Lagarde's gloomy outlook for eurozone growth and inflation — combined with a hawkish tone around the energy shock — prompted Wall Street and FTSE to tumble.

• Midweek rebound faded quickly: European shares climbed for three consecutive sessions mid-week as crude prices temporarily eased, with investors also watching the U.S. Federal Reserve's rate decision. However, the recovery was fully unwound by Thursday and Friday as the Middle East situation deteriorated again.

• Inflation forecasts revised sharply higher: ECB staff projections published this week now see eurozone inflation at 2.6% for 2026, with President Lagarde presenting a "gloomy outlook" for growth and prices. Under a severe scenario tied to the Iran war, the ECB warned inflation could peak at 6.3% in the first quarter of 2027.

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Earnings & Corporate

• Unilever in focus on Friday selloff: Shares of Unilever were cited among stocks weighing on the FTSE 100 in Friday's session as European stocks finished the week lower on a combination of rising oil prices and renewed interest-rate-hike bets. The stock's performance contributed to the broader negative sentiment that closed out the week.

• Corporate earnings overshadowed by macro: With the Middle East conflict and central bank decisions commanding attention, corporate results this week largely failed to move markets individually. The broader STOXX 600 earnings backdrop remains challenging — fresh data from the prior period had already shown Q1 2026 earnings for STOXX 600 companies expected to fall 3.4% year-on-year, a deterioration from already-weak forecasts.

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Geopolitics & Energy

• Iran attacks Qatar's Ras Laffan LNG terminal: Iran's strike on Qatar's Ras Laffan LNG complex — the world's largest — raised acute concerns about European gas supply security. The EU gets a significant share of its LNG from Qatar, and the attack prompted European leaders to call for a moratorium on military strikes on energy and water infrastructure. EU leaders meeting in Brussels doubled down on their refusal to join U.S. and Israeli military campaigns, while grappling with the immediate impact of rising oil and gas prices.

• European Commission draws red line on Russian gas: Despite mounting pressure from some EU member states to ease energy supply constraints, the European Commission firmly rejected any relaxation of the Russian fossil fuel ban, declaring "not one molecule" of Russian gas would be allowed back in as a crisis remedy. The stance came as Russian President Vladimir Putin signalled Moscow was considering halting all fuel exports to Europe, adding a further layer of supply-side risk to an already stressed continent.

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What to Watch Next Week

• Eurozone economic data: Markets will closely watch any flash PMI readings and inflation prints that could influence the ECB's next policy move, particularly given this week's sharply upward-revised inflation projections.
• Energy market developments: Further escalation or de-escalation around Ras Laffan and Iranian oil infrastructure will be the pivotal variable for European equities; traders are monitoring reports that the Trump administration is considering occupying or blockading Iran's Kharg Island oil terminal.
• EU emergency energy summit: Following this week's Brussels gathering, EU leaders are expected to continue deliberations on emergency LNG sourcing alternatives and strategic reserve policies in response to the Gulf supply disruption.
• STOXX 600 earnings calendar: A fresh batch of European corporate results is due next week, though macro forces are likely to remain the dominant driver of price action.