The Eurozone economy expanded 0.6% in Q2 2026, revised up from initial estimates of 0.4%, according to final Eurostat data. It marked the strongest quarterly growth since Q2 2022, driven largely by a sharp upward revision to Ireland’s GDP, which surged 10.2% after plunging 7.8% in Q1. Germany’s growth was also revised higher to 0.3% from 0.2%, while France’s was lowered to 0.0% from 0.2%. Spain once again led the bloc’s larger economies, with flash data showing 0.7% growth, while Italy’s expansion was confirmed at 0.2%. Net trade made the largest contribution to growth, adding 0.9 percentage points as exports jumped 3.4%, outpacing a 1.5% rise in imports. Household consumption contributed 0.2 points, with spending rising 0.4% after a 0.1% increase in Q1. Fixed investment and government spending had negligible contributions, while changes in inventories subtracted 0.5 points. On an annual basis, Eurozone GDP growth accelerated to 1.2%, exceeding the second estimate of 1.0%.

Brent crude oil fluctuated above $96 a barrel on Monday after surging 9.3% last week, as escalating tensions between Washington and Tehran raised fears of prolonged disruptions to energy shipments through the Strait of Hormuz. The US said it had struck three Iranian oil tankers over the weekend, destroying one, in retaliation for ballistic missile attacks on US Navy warships. Iran responded by threatening to establish a new restricted zone outside the strait, reportedly extending from the US Navy blockade line into parts of the Persian Gulf. Tehran also claimed to have targeted three tankers, although the reports could not be independently confirmed. US Energy Secretary Chris Wright said Washington would maintain its naval presence and blockade, aimed at limiting Iranian oil exports while supporting the safe passage of commercial vessels. Wright previously said that millions of barrels of crude were still moving through the Strait of Hormuz despite the escalating conflict.

Stocks in Europe kicked off the week on a cautious note, with both the STOXX 50 and STOXX 600 trading around the flatline as investors continued to monitor developments in the Middle East and the political situation in Germany. The far-right AfD secured a historic victory in the state elections in Saxony-Anhalt. The result represents a setback for Chancellor Merz, with his CDU recording its worst-ever result in Saxony-Anhalt since German reunification. Meanwhile, oil prices moved higher amid renewed strikes involving the US and Iran. Investors are also looking ahead to the ECB's monetary policy decision this week, with the central bank widely expected to raise borrowing costs. Shares of Novartis fell more than 3% after its cholesterol drug failed to meet expectations in a closely watched study. In contrast, ASML Holding rose 1.2% and Infineon gained 1.8%, while the energy sector traded in positive territory, led by TotalEnergies, which advanced 1.6%.

Germany’s industrial production dropped 1.1% mom in July 2026, missing market forecasts for a 0.1% increase and reversing from a downwardly revised stagnation in June. It was the fourth monthly decline so far this year, mainly driven by a 9.2% plunge in automotive production following weeks of production shutdowns. Excluding energy and construction, industrial output fell 2.2%, with declines across capital goods (-3.4%), consumer goods (-2.2%), and intermediate goods (-0.2%). In contrast, energy production rose 4.7%, lifted by higher electricity generation from wind and photovoltaics, while construction output rose 0.9%. Production in energy-intensive industrial sectors fell 1.7% from June. On a less volatile three-month basis, industrial output edged up 0.4% in the May–July period from the previous three months. Compared with a year earlier, industrial production shrank 1.6%, deepening from a 0.5% fall in June and highlighting continued weakness in Germany’s manufacturing sector.

Consumer prices in Sweden rose by 0.3% year-on-year in August 2026, slightly up from 0.2% in July, which was the lowest reading since May 2025, but well below market expectations for a 0.6% increase, according to preliminary estimates. “Preliminary figures show a slightly higher inflation rate according to the CPI,” said Caroline Neander, price statistician at Statistics Sweden. On a monthly basis, consumer prices fell by 0.3%, matching the previous month. Meanwhile, the CPI with a fixed interest rate (CPIF), the Riksbank’s target measure, held at 0.7% year-on-year, unchanged from the prior month but slightly below the expected 0.8% gain. Stripping out volatile energy prices, a measure closely watched by the central bank, inflation eased marginally to 0.5% compared to the same month a year earlier.

The Lloyds House Price Index showed UK house prices fell 0.4% year-on-year in August 2026, marking the first annual decline since November 2023, after rising 0.1% in July. Compared with the previous month, prices fell 0.2%, defying expectations of a 0.2% rise and following a 0.1% decrease in July, bringing the average property price to £298,468. Lloyds Mortgages Director Andrew Asaam said the housing market has faced a more difficult backdrop in recent months, with global events affecting inflation and borrowing costs, while fewer homes are changing hands as buyers and sellers remain cautious. Lloyds expects the market to remain fairly subdued in the months ahead, although wage growth and resilient employment should support demand. Regionally, Northern Ireland recorded the strongest annual growth at 6.9%, followed by Scotland at 3.5%, the North East at 2.7%, and the North West at 2.0%. Meanwhile, the South East posted the largest decline at 1.6%, followed by Greater London at 1.5%.