The Eurozone Economic Sentiment Indicator fell to 97.9 in September 2026 from 98.4 in August, below market expectations of 99.0. It marked the first decline in sentiment since April, as consumers became more concerned about rising oil prices and stalled negotiations to end the six-month US-Iran war. Consumer confidence deteriorated to -16.5 from -15.5, while inflation expectations rose to 35.2 from 33.0. Sentiment was broadly unchanged among retailers (-6.4 vs -6.3) and constructors (-5.0 vs -5.0), while manufacturers’ confidence improved to -3.8 from -5.0 despite higher selling-price expectations (20.3 vs 16.9). Service-sector sentiment also strengthened to 6.1 from 5.6. Among the major economies, sentiment fell sharply in France (-1.7) and moderately in Italy (-0.8), while it rose in Spain (+3.4), Germany (+0.6) and the Netherlands (+0.5).

Net mortgage approvals for UK house purchases, a key indicator of future borrowing, fell to 54,900 in August 2026, down from a revised 55,900 in July and below market expectations of 56,100. Approvals reached their lowest level since December 2023 and remained well below the previous six-month average of around 60,100, highlighting continued pressure from elevated borrowing costs. Meanwhile, approvals for remortgaging with a different lender declined to 34,000 from 34,600. The effective interest rate on newly drawn mortgages rose to 4.60% in August, from 4.45% in July, while the rate on the outstanding mortgage stock edged up to 4.00% from 3.97%.

The euro fell to around $1.135, its lowest since May 2025, pressured by broad dollar strength and expectations that monetary tightening in Europe will lag the US. Stalled talks over reopening the Strait of Hormuz pushed oil prices higher, reinforcing expectations of further Fed rate hikes and boosting safe-haven demand for the dollar. Meanwhile, ECB President Christine Lagarde said Monday that the recent inflation surge has yet to generate significant second-round effects, suggesting a measured policy response. The eurozone’s weak outlook could also limit aggressive ECB tightening, with GDP seen growing just 0.9% this year. The currency also remained under pressure from political uncertainty ahead of key elections in France, Spain and Italy next year. Still, with inflation above 3% and potentially nearing 4% by year-end, markets are pricing in up to four additional rate hikes over the next year, with the ECB expected to resume tightening in December when fresh projections are released.

European stocks rose for a third consecutive session on Tuesday, with the STOXX 50 gaining 0.5% and the STOXX 600 advancing 0.7%. Investors continued to look past higher oil prices and the standoff between the US and Iran, while bond yields remained at multi-year highs. The technology sector was among the top performers, led largely by semiconductor stocks, following a Reuters report that Anthropic is making a major bet on AI transforming the global economy and that public investors will help finance its expansion. ASML Holding (2.8%), STMicroelectronics (2.5%), Schneider Electric (2.3%), Infineon Technologies (2%) were among the top gainers. Also, Legrand soared 5.8% after raising its medium-term targets. On the other hand, industrials and the food & beverages sector were under pressure. Vinci (-3.3%), Ocado (-3.2%), Vestas (-3.4%) and ThyssenKrupp (-2.9%) bottomed the STOXX 600.

Switzerland’s KOF Economic Barometer rose to 109.1 in September 2026, up from a revised 107.5 in August and well above the market expectation of 106. It was the sixth consecutive monthly rise, bringing the barometer to its highest level since September 2021 and pointing to a continued improvement in the outlook for the Swiss economy. Among the indicator groups underpinning the barometer, manufacturing, services, and construction showed particularly positive developments. By contrast, the outlook for foreign demand and financial and insurance services weakened slightly. Within the producing sector, most sub-indicators related to business activity improved. In particular, indicators for exports, intermediate-goods inventories, and the general business situation pointed to a brighter outlook. However, employment prospects remained under pressure. Within manufacturing, the chemical and pharmaceutical, paper and printing, and textile industries performed particularly well.

The Reserve Bank of Australia raised its cash rate target by 25 bps to 4.60% in a unanimous September 2026 decision, in line with expectations, marking its fourth hike this year and taking borrowing costs to their highest since 2011. Policymakers noted that higher global energy prices following oil supply disruptions amid the broader Middle East conflict, stronger-than-expected recent inflation and persistent domestic capacity constraints are adding to inflation. AI-related demand is also driving increases in global technology goods prices, while firms report rising costs and plans to pass costs on. At the same time, output growth slowed but was slightly stronger than expected in Q2, while consumer spending is easing. Housing prices fell in most capital cities and new housing loans declined, while labour market conditions have now also eased. The Board said further tightening may be needed to prevent inflation from becoming embedded and return it sustainably to target.