Europe Markets Weekly — 2026-10-31

Market Snapshot

• STOXX 600: Closed Friday lower, retreating from a one-week high due to a global tech selloff, though it still posted its best month since June.
• DAX: Gained 1.4% on Thursday following the ECB decision, but faced pressure in the final days of the week from tech sector weakness.
• FTSE 100: Increased 0.3% on Thursday, with energy stocks providing some support against broader market volatility.
• CAC 40: Rose 1.1% on Thursday, benefiting from the ECB's decision to hold rates, though French fiscal concerns remain a lingering drag.

Key Drivers

• ECB Policy Hold & Lagarde’s Exit: The European Central Bank kept its deposit rate at 2.5% on Thursday. President Christine Lagarde announced she would leave her post in February, months before her term ends, adding uncertainty to the eurozone's policy outlook.
• Inflation Resurgence: Eurozone inflation reached 3.8% in September, its highest level in three years and nearly double the ECB’s 2% target. This persistent price pressure, driven significantly by energy costs, has complicated the central bank's path to easing.
• Tech Sector Volatility: A global selloff in technology shares, triggered by disappointing earnings from major US tech firms like Amazon and Intel, spilled over into European markets on Friday, pulling the STOXX 600 down from its highs despite strong local earnings reports.

Earnings & Corporate

• Strong Q3 Earnings Season: European companies reported their second-best earnings season since 2022. The STOXX 600 saw an average quarterly earnings growth of 23.6%, with revenue expected to increase 13.6% year-on-year, the strongest growth since Q3 2022.
• Shell’s Record Profits: Energy giant Shell delivered its highest third-quarter adjusted earnings since 2022, totaling approximately $10.8 billion. The company also unveiled a $5 billion share buyback plan, boosting investor confidence in the energy sector.

Geopolitics & Energy

• Gas Prices Surge Above €100: European natural gas prices resumed gains above €100 per megawatt-hour, driven by fears that the US may resume combat operations against Iran, which could prolong supply disruptions in the region.
• Winter Energy Crisis Concerns: EU energy ministers are meeting to address soaring gas and diesel prices as unusually low gas storage levels heighten Europe's vulnerability ahead of winter. The EU is paying €10 billion more per month for oil imports compared to 2025 due to Middle East tensions.

What to Watch Next Week

• Q3 GDP Data: Preliminary readings of Q3 Gross Domestic Product from Germany and the Eurozone are scheduled for release, which could further impact the Euro's valuation.
• ECB Survey Results: The results of the ECB Survey of Professional Forecasters for the fourth quarter of 2026 have been released, with economists revising their inflation estimates for 2026 up to 3%.
• Energy Supply Developments: Continued monitoring of Middle East geopolitical tensions and their impact on LNG flows and oil prices, as EU ministers work on emergency measures for winter energy security.