Global Economy
European Stocks Surge to Best Quarter in Over Five Years
European equity markets closed Tuesday with the Stoxx 600 delivering its strongest quarterly gain since Q4 2020. The rally was driven by a sharp pull‑back in oil prices, robust performance from the technology sector and easing inflation signals from Germany and France, which together softened expectations of further ECB rate hikes. Major indices – CAC 40, DAX and FTSE 100 – all posted gains, while the Stoxx 600 set a new intraday record at 643.55 points, up 10.05 % for the quarter.
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European equities end Q2 on a high note
Tuesday saw all major European bourses finish in positive territory, with the Stoxx 600 posting its best quarterly performance since the end of 2020. The rally was underpinned by a rapid decline in crude‑oil prices, a strong showing from the technology sector, and easing inflation readings in the euro‑area’s two biggest economies.
- CAC 40 (Paris): +0.44 % to 8,403.99 points
- DAX (Frankfurt): +1.50 %
- FTSE 100 (London): +0.12 %
- EuroStoxx 50: +1.55 %
- FTSEurofirst 300: +0.93 %
- Stoxx 600: +0.88 % (intraday record 643.55 points, +10.05 % Q‑on‑Q)
The Stoxx 600’s 10.05 % quarterly gain is the steepest since the October‑December 2020 period, while the CAC 40 recorded a 7.5 % rise for Q2 – its strongest showing since Q1 2024. On a monthly basis, the Stoxx 600 and CAC 40 were up 2.5 % and 2.6 % respectively.
Oil prices retreat and geopolitical backdrop
Crude‑oil prices have slipped back to pre‑conflict levels observed before the end‑February outbreak of the Middle‑East war. A provisional framework deal between the United States and Iran, signed this month, rekindled hopes of a lasting resolution to a dispute that had disrupted oil flows through the Strait of Hormuz and sparked worldwide inflation concerns. However, key issues – such as Iran’s nuclear programme and frozen Iranian assets – remain unresolved, and high‑level talks in Doha have yet to materialise, leaving the peace process uncertain.
Inflation data eases pressure on the ECB
On Tuesday, Germany and France released their latest inflation figures, showing a slowdown that could reduce the urgency for the European Central Bank (ECB) to hike short‑term rates further. Despite the softer data, several policymakers warned that elevated energy costs continue to weigh on the economy and will linger for some time.
Policy‑maker spotlight
The annual ECB forum in Sintra, Portugal, featured comments from senior officials stressing the need to monitor energy‑price pressures. In Washington, Fed Governor Kevin Warsh is slated to speak at the meeting on Wednesday, attracting close attention after his initial, “hawkish” tone earlier this month.
Overall, the combination of lower oil prices, strong tech earnings and more benign inflation expectations has lifted investor sentiment across Europe, setting the stage for a bullish start to the second half of 2026.