European stocks saw a notable decline during Thursday’s trading. This happened as investors’ bets on the US Federal Reserve raising interest rates later in 2026 increased.
Decline of the STOXX Index
Europe’s STOXX 600 index closed 0.3% lower, ending a five-day winning streak.
European bourses and European stocks were mixed, with France and Germany recording limited gains. However, Italy and Spain came under selling pressure.
Britain’s FTSE 100 index also fell 1%, weighed down by losses in energy and healthcare stocks. These sectors are heavily weighted in the index.
Pressure from the oil and gas sector
The main pressures came from the oil and gas sector, which fell 1.5%. This coincided with the decline in global oil prices.
This followed the announcement of a US-Iran deal aimed at ending the war that has affected global energy supplies.
In contrast, travel and leisure stocks benefited from lower energy costs, rising by about 0.8%.
No change in interest rates
The omission of future guidance from the central bank’s statement also raised investors’ concerns. They are worried about the direction of the upcoming monetary policy.
On the European front, the European Central Bank raised borrowing costs last week. Meanwhile, markets expect a further 25 basis points increase before the end of the year.
The mining sector suffered the biggest losses among European sectors, falling by 3.1%. This was due to pressures from the strength of the dollar.
Auto stocks also recorded sharp declines, with Mercedes-Benz, Volkswagen and Stellantis falling between 2.8% and 4.6%.
BMW lost about 4% after a surprise earnings warning.
All eyes remain on central banks’ decisions in the coming months. These decisions are the most prominent factor in determining the trajectory of global financial markets.
