Europe Markets Weekly — 2026-08-01

Market Snapshot

• STOXX 600: Record highs reached during the week; inched down 0.1% to 649.19 points by Friday close, yet up 1.3% for July
• DAX: Up 0.8% in early Friday trade; up 0.60% on July 30 to 25,612.03 points, leading regional gains for the week
• FTSE 100: Up 0.4% in early Friday trade; down slightly on July 30
• CAC 40: Up 0.5% in early Friday trade; up 0.92% on July 30 to 8,485.64 points

1 sources

usnews.com

usnews.com

Key Drivers

• Eurozone Inflation Rises to 2.9%: Inflation accelerated to 2.9% in July 2026 from 2.8% in June, driven primarily by energy prices jumping 10.0% year-on-year, according to Eurostat flash estimates released July 31. Core inflation edged up to 2.5%, potentially reviving expectations of further ECB tightening beyond the central bank's July pause.

• AI-Driven Tech Rally Lifts Markets: Tech shares powered European indices higher, with strong momentum from artificial intelligence enthusiasm offsetting earlier weakness in U.S. megacap names. The pan-European STOXX 600 built on solid monthly momentum as investors digested earnings results and assessed the divergent AI dynamics between U.S. and European technology leaders.

• Robust Earnings Season Boosts Investor Confidence: European corporates delivered solid Q2 results with STOXX 600 companies demonstrating healthy earnings growth. Positive surprises from major sectors outweighed selective weakness, supporting the region's benchmark index trajectory and setting the stage for continued momentum into August.

1 sources

euronews.com

euronews.com

Earnings & Corporate

• Schneider Electric, Rolls-Royce Lead Earnings Beat: On July 30, European stocks advanced on the busiest day of earnings season as upbeat results from Schneider Electric SE and Rolls-Royce Holdings Plc, along with gains from banking stocks, outweighed weakness in pharmaceutical names. Sanofi SA shares slumped despite broader market strength.

• July Earnings Growth at 17.3%: STOXX 600 companies are expected to report earnings growth of 17.3% in Q2 2026 based on results from 77 companies and market estimates for those yet to report, signaling healthy corporate performance across the region despite macro headwinds.

Geopolitics & Energy

• Europe Faces Natural Gas Supply Squeeze Amid Iran Tensions: European natural gas reserves are lagging ahead of winter months, exposing the region to continued elevated energy prices for households and businesses. Geopolitical tensions linked to Iran are compounding supply concerns, creating a challenging backdrop for energy-intensive sectors and consumer spending.

• EU Energy Crisis Response Criticized for Short-Term Fixes: European governments are applying temporary measures to address soaring energy costs, but these solutions are masking structural challenges that require long-term energy policy reform. The patchwork approach risks leaving the bloc vulnerable to future supply shocks.

What to Watch Next Week

• ECB September 10 Rate Decision: Eurozone GDP flash estimate from Q2 2026 will be a critical input before the ECB's next monetary policy decision. Markets currently assign a 79% probability to a rate move, with inflation data providing signals on the central bank's likely course.

• Continued Corporate Earnings Flow: Additional Q2 results from European companies will continue to drive sentiment, with investors monitoring guidance on second-half growth and margin pressures from elevated energy costs.

• Energy Market Dynamics: Developments in Middle East geopolitics and European natural gas storage levels heading into autumn will remain critical for energy stocks and overall inflation expectations.