European Stocks Drop for 2nd Session

European stocks closed sharply lower for a second session on Tuesday amid persistent concerns that tight financial conditions could hamper economic activity. The Euro STOXX 50 fell 0.9% to 6,365 and the STOXX Europe 600 dropped 0.6% to 647. The US and Iran exchanged more strikes and prolonged the outlook of suspended energy exports from the Persian Gulf, raising fuel prices and inflationary risks. The elevated energy price backdrop had already lifted headline inflation in the Eurozone, per the latest data, consolidating the likelihood of an ECB hike this month. SAP, Prosus, and Adyen dropped between 4% and 2.6%. Industrials also closed lower with Siemens, Schneider, and Rheinmetall dropping around 2.5%. On the other hand, Novartis surged 6.3% as its experimental multiple sclerosis pill succeeded in two late trials.

European stocks moved into negative territory on the first trading day of September, with both the STOXX 50 and STOXX 600 falling around 0.7% after failing to sustain modest gains at the open and tracking broader weakness in global equities. Another rise in oil prices amid escalating tensions in the Middle East is adding to inflationary pressures, with investors betting the ECB will tighten monetary policy further. Eurozone inflation accelerated for a second straight month to 3.3% in August, in line with expectations and reaching its highest level since September 2023. HSBC (-1.3%), Roche (-1.9%), Siemens (-1.5%), AstraZeneca (-1.5%), Banco Santander (-1.6%) and SAP (-2.7%) traded lower. Energy stocks, meanwhile, remained in positive territory. Shell (+1.4%), TotalEnergies (+1.3%) and BP (+3.5%) advanced. Novartis surged nearly 4% after its oral multiple sclerosis drug met the main goal in late-stage trials.

EU50 decreased to 6404.00 Index Points, the lowest since August 2026. Over the past 4 weeks, Euro Area Stock Market Index (EU50) lost 0.32%, and in the last 12 months, it increased 21.07%.