Europe Markets Weekly — 2026-04-30

Market Snapshot

• STOXX 600: Down on the week; closed –0.3% on Tuesday alone, with nearly all sectors in the red
• DAX: –0.27% (intraday reading as of late this week)
• FTSE 100: Under pressure amid continued Middle East risk aversion
• CAC 40: –0.46% (intraday reading as of late this week)

Key Drivers

• Iran conflict stalemate weighs on sentiment: European shares dipped on Wednesday as a continuing U.S.-Iran impasse kept risk appetite firmly in check. Investors monitored a packed corporate earnings calendar but refrained from adding meaningful risk while diplomatic progress remained elusive.

• ECB holds rates — but dilemma deepens: The ECB is widely expected to keep its deposit facility rate unchanged at 2% at Thursday's meeting — its seventh consecutive hold — as opposing forces of war-driven inflation and slowing growth pull policy in different directions. ECB President Christine Lagarde has warned that the "stop-start nature" of the Iran war is making the economic outlook increasingly difficult to assess.

• Eurozone inflation expectations jump to 4%: The ECB's Consumer Expectations Survey for March 2026 showed median 12-month inflation expectations surging to 4.0%, driven largely by energy price pass-through from the Iran war. Nominal spending growth also increased, complicating the ECB's case for further easing.

• EUR/USD slides for third straight session: The euro extended losses against the dollar on Thursday, trading at 1.1663 and down from weekly highs at 1.1755, as markets weighed the prospect of a prolonged ECB hold against continued energy-driven price pressures ahead of the rate decision.

Earnings & Corporate

• Novartis rises on Q1 beat: Swiss pharmaceutical giant Novartis rose 0.7% on Tuesday after reporting first-quarter earnings that met or exceeded expectations, bucking the broadly negative session for European equities. The result provided a rare bright spot on a day when the pan-European STOXX 600 fell 0.3% with nearly all sectors in the red.

• Adidas rallies, lifting consumer sector: Adidas delivered strong earnings that helped European markets snap a three-session losing streak on Wednesday, with Reuters describing the sportswear giant's results as a catalyst for the brief recovery in sentiment. The broader market edged higher as corporate earnings took centre stage, though gains remained constrained by geopolitical uncertainty.

Geopolitics & Energy

• Brent crude spikes above $110 as UAE exits OPEC: Oil prices surged dramatically this week, with Brent crude breaking above $110 per barrel as fears mounted that the U.S.-Iran war could drag into a prolonged conflict. The shock exit of the UAE from OPEC raised further questions over Middle East energy supply arrangements, compounding the upside pressure on prices.

• EU's new Russia sanctions target Yamal LNG condensate: New EU sanctions published this week will ban condensate imports from Russia's Yamal LNG project and other associated facilities from January 1, 2027. The measures form part of the EU's 20th package of restrictive measures against Russia and are expected to affect European energy supply chains, particularly for lighter fuel products.

What to Watch Next Week

• ECB rate decision (Thursday, May 7): Markets will closely parse President Lagarde's post-decision press conference for signals on the future rate path, particularly given the new 4% inflation expectations reading and stalling growth data.
• Eurozone flash inflation data: April CPI figures for the euro area are expected to confirm whether energy-driven price pressures are broadening, which could shift the ECB debate from "hold" to "hike" territory.
• U.S.-Iran diplomatic developments: Any escalation or breakthrough in ceasefire negotiations would have immediate, outsized implications for European energy prices, risk sentiment, and airline/travel stocks.
• Continued Q1 earnings flow: A further wave of STOXX 600 company results is due, with energy majors watched closely given their outperformance relative to the broader index during the current supply shock.