Europe Markets Weekly — 2026-07-04
European stocks surged to record highs this week as the STOXX 600 notched its strongest weekly performance in over a month, driven by cooling inflation data that damps ECB rate hike expectations and weaker-than-expected U.S. jobs figures. Cyclical and defence stocks led the rally as investors rotated out of technology, while easing geopolitical tensions further broadened market gains across the continent.
Europe Markets Weekly — 2026-07-04
Market Snapshot
- STOXX 600: Best week in over a month, hitting record highs with fourth consecutive weekly gain; +0.69% on Friday
- DAX: Reached all-time peak as part of broader European rally
- FTSE 100: Posted weekly gains amid record STOXX 600 performance
- CAC 40: Participated in continental rally hitting fresh highs
Europe’s STOXX 600 set for best week in over a month as rally broadens out By Reuters
Europe shares extend record rally on cool U.S. data, geopolitical progress By Investing.com
BofA lifts Stoxx 600 price target amid hopes for improving Eurozone growth By Investing.com
Key Drivers
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Cooling Eurozone Inflation Weakens ECB's Rate Case: Eurozone inflation fell more than expected in June to 2.8%, with core inflation also moderating, significantly reducing expectations for an imminent European Central Bank rate hike at its July 23 meeting. The Euro weakened below 1.1450 on softer inflation data, trimming ECB tightening bets.
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Weaker U.S. Jobs Data Boosts European Sentiment: June U.S. nonfarm payroll growth plummeted, reducing Federal Reserve rate hike expectations and supporting a broader rotation into cyclical European stocks. The weak U.S. labour data contrasted sharply with the Eurozone unemployment rate holding at a record low, highlighting a growing transatlantic growth divide.
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Geopolitical Progress and Sector Rotation Broaden Rally: Defence and cyclical stocks surged as Middle East tensions eased and investors shifted away from technology. Utilities stocks led regional gains, rising 1.78%, as investors sought defensive positions amid a broadening market advance beyond tech-heavy sectors.
Earnings & Corporate
No recent notable European corporate earnings reports or specific company developments were published in the past 24 hours.
Geopolitics & Energy
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Ukraine Pushes New EU Sanctions on Fuel Exports: Ukraine is advocating for fresh European Union sanctions targeting fuel exports to Russia, as Russian refining capacity faces disruption from Ukrainian attacks. Russia has begun importing gasoline from India and secured additional supplies from Kazakhstan, indicating evolving energy trade patterns affecting EU sanctions strategy.
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European Energy Security Shifts Away from Russian Dependence: Russia's share of EU natural gas supply has plummeted from 45% in 2021 to just 12% by 2026, marking a dramatic rebalancing of European energy security. Russian liquefied natural gas continues to arrive through Spain, France, Belgium and the Netherlands despite the phase-out, while pipeline deliveries remain concentrated in Hungary, Slovakia and Greece.
What to Watch Next Week
- ECB Monetary Policy Decision (July 23): Markets await the European Central Bank's next rate decision, with cooling inflation data now expected to fuel patience and potentially delay further tightening.
- U.S. Independence Day Holiday Impact: U.S. financial markets closed on Friday (July 4), resulting in subdued trading activity and reduced volatility for European indices.
- Second-Quarter Corporate Earnings Season: European companies continue reporting Q2 results, with market focus on whether earnings growth justifies current valuations amid economic slowdown concerns.
- Geopolitical Developments: Ongoing U.S.-Iran negotiations and Middle East tensions remain key catalysts for energy prices and defence sector performance in European markets.
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