London, May 15, 2026, 08:53 BST
European shares slipped on Friday, erasing some of Thursday’s tech-driven gains as oil climbed after U.S.-Iran negotiations stalled, bringing inflation fears back into focus. The STOXX 600 dropped 0.8% to 611.27 points by 0703 GMT. Germany’s DAX fell 1%, while France’s CAC 40 lost 0.8%.
This shift isn’t limited to energy desks anymore. Brent crude was up 1.67% at $107.49 a barrel as of 0642 GMT, U.S. crude pushing past $103. Those prices don’t just hit traders—they ripple straight through to transport, manufacturing, and eventually the consumer’s wallet.
Europe faces greater risk from this sort of supply crunch, given how much of its energy comes from abroad. About 20% of the world’s oil and LNG—liquefied natural gas shipped by sea—typically passes through the Strait of Hormuz. U.S. Trade Representative Jamieson Greer told Bloomberg News that China is pressing for the route to be kept open, free from restrictions, tolls, or military oversight.
Bond traders were quick to move. German Bund yields tacked on almost 6 basis points, sitting near 3.11%. Italy’s 10-year paper pushed higher too, up close to 9 basis points at roughly 3.87%. (A basis point equals one-hundredth of a percentage point.) “It’s not just inflation, but also higher deficits that should be the focus,” said Jefferies strategist Mohit Kumar. Reuters
It’s all about rate bets right now. According to a Reuters poll, 59 out of 70 economists see the European Central Bank lifting its deposit rate by 25 basis points to 2.25% in June. But Martin Wolburg at Generali Investments thinks markets are overshooting: “markets are exaggerating in expecting three rate hikes.” On the other hand, Jens Eisenschmidt at Morgan Stanley pushed back: “At least two rate hikes seem likely.” Reuters
Prediction markets leaned in that hawkish direction. Kalshi pegged the odds of a 1-25 basis-point ECB hike in June at 75%, while Polymarket saw an 83% likelihood for a 25 basis-point move. Polymarket also gave just a 28% shot that Strait of Hormuz traffic would be back to normal by the end of June.
The move reversed course just a day after the STOXX 600 added 0.8%, closing at 616.05, as tech names surged 2.6%. STMicroelectronics, BE Semiconductor and Infineon all traded higher on Thursday. SAP advanced, with Bank of America citing growth in its cloud business and its backlog. But Sameer Samana at Wells Fargo Investment Institute flagged Europe’s limited exposure to AI hardware as a “most persistent reason for underperformance” against U.S. and Asian rivals. Reuters
LVMH lost ground after it reached a deal to offload Marc Jacobs to a joint venture led by WHP Global and G-III Apparel Group, with the transaction valuing the buyers’ stake at up to $850 million. Brittain Ladd, a consultant at Chang Robotics, described the move as a “new playbook of owning the IP, licensing aggressively and keeping operations lean”—a model that’s also emerged in deals like Adidas unloading Reebok to Authentic Brands. Reuters
Stellantis edged higher even as the rest slipped, after striking a deal worth about $1.2 billion with Dongfeng, its longtime Chinese collaborator, to manufacture Peugeot and Jeep vehicles in China. The plan calls for more than 8 billion yuan—around 1 billion euros in total investment. Stellantis is putting in close to 130 million euros. Chief Executive Antonio Filosa said the venture will leverage “cutting-edge EV technologies.” Reuters
Not everything looks grim on the earnings front. According to LSEG I/B/E/S, European blue-chips are tracking for their best profit growth since Q4 of 2022. First-quarter earnings are set to climb an average 11.5%, thanks in large part to strength from energy and financials. Revenue, though, is still forecast to dip.
Germany is still dragging. The economy ministry flagged that first-quarter growth was just 0.3%, and warned Q2 could take a sharp knock, blaming price pressures, supply snarls, and ongoing uncertainty. Separate figures out this week showed German wholesale prices up 6.3% in April—the fastest jump in three years. Felix Schmidt, economist at Berenberg, sees inflation topping 3% in May.
Risks aren’t one-way here. A swift reopening of Hormuz, or a credible peace agreement, could pull oil prices lower and take some heat off stocks. But if the disruption drags on, investors get a tougher hand: energy costs stay elevated, central banks keep policy tight, and growth slows. The ECB, for its part, isn’t tying itself to any particular rate course, stressing that the fallout will hinge on how severe and prolonged the energy shock is, plus any secondary effects like higher wages or broader price increases.
