Europe Markets Weekly — 2026-05-17
European equities closed the week in the red, with the STOXX 600 and FTSE 100 both declining sharply on Friday as rising oil prices reignited inflation fears and triggered a broad bond sell-off. The combination of Iran war-linked energy cost pressures, hot U.S. inflation data strengthening Fed rate-hike expectations, and domestic political uncertainty in the UK weighed heavily on investor sentiment. European blue-chip earnings are tracking their strongest growth since late 2022, offering a fragile counterbalance to the macro headwinds heading into next week.
Europe Markets Weekly — 2026-05-17
Market Snapshot
- STOXX 600: –1.1% on Friday, logging weekly losses
- DAX: No confirmed weekly figure available from post-2026-05-15 sources
- FTSE 100: –1.7% on Friday
- CAC 40: LVMH dipped 1.1% Friday after agreeing to sell fashion brand Marc Jacobs
Key Drivers
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Inflation fears dominate Friday's session: European stocks fell by their most since late March on Friday, with the STOXX 50 declining 1.8% and the STOXX 600 losing 1.1%, as the latest rise in oil prices fanned inflation fears and worsened a global bond sell-off.
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Hot U.S. inflation data weighs on euro: The EUR/USD pair traded near 1.1650 on Friday after strong U.S. inflation data boosted expectations for further Federal Reserve rate hikes, dragging on European sentiment and cross-Atlantic capital flows.
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UK political uncertainty adds to FTSE headwinds: European stocks closed lower Friday also as UK Prime Minister Starmer faced a leadership challenge, adding domestic political risk to an already pressured FTSE 100 session.
Earnings & Corporate
- European blue-chips on track for best earnings growth since late 2022: The latest LSEG I/B/E/S data published Thursday showed STOXX 600 companies are heading for their strongest profit growth since the fourth quarter of 2022, though revenue growth remains muted and is still expected to fall in aggregate. The earnings beat rate has provided some cushion against macro headwinds.
- LVMH sells Marc Jacobs: French luxury conglomerate LVMH agreed to sell fashion brand Marc Jacobs, with the news contributing to a 1.1% dip in LVMH shares on Friday and adding to CAC 40 weakness.
Geopolitics & Energy
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Iran war driving energy inflation across Europe: Europe continues to face mounting energy challenges stemming from the ongoing conflict in Iran, which has pushed oil prices higher and reignited fears of a second energy crisis within four years. The latest rise in oil prices was a key catalyst for Friday's equity sell-off and is feeding directly into consumer and producer price indices across the continent.
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Russia sanctions regime under scrutiny: The House of Commons Library updated its analysis this week on how sanctions against Russia have evolved since January 2025, noting potential divergence between U.S. and European allied policy — a dynamic with direct implications for European energy supply diversification and the outlook for Russian fossil fuel export revenues.
What to Watch Next Week
- ECB communications: With the ECB holding its deposit rate at 2% and inflation now elevated, markets will be alert to any further signals from governing council members on the pace and timing of future adjustments. Watch for speeches from ECB officials in the context of rising oil-driven price pressures.
- Eurozone economic data: Investors will monitor incoming flash PMI readings and any updated inflation prints that could shift rate-hike expectations further, particularly given the EUR/USD slide toward 1.1650.
- UK political developments: The leadership challenge facing Prime Minister Starmer will remain a source of volatility for FTSE-listed stocks and sterling. Any resolution — or escalation — could move UK-exposed equities meaningfully.
- STOXX 600 earnings season wind-down: With blue-chip profit growth at multi-year highs but revenue still under pressure, the final major reports of the season will be scrutinised for any forward guidance on energy cost pass-through.
This content was collected, curated, and summarized entirely by AI — including how and what to gather. It may contain inaccuracies. Crew does not guarantee the accuracy of any information presented here. Always verify facts on your own before acting on them. Crew assumes no legal liability for any consequences arising from reliance on this content.
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