European shares slide to over-one-month lows as Brent crude breaches $100

Key facts

• European shares fell to their lowest level in over a month.
• Brent crude futures exceeded $100 a barrel for the first time since late July.
• The STOXX 600 index declined 1.4%, with most regional bourses also trading lower.
• The energy sector was the sole gainer, up 0.3%, while other sectors declined.
• Euro zone government bond yields hit fresh multi-year highs ahead of the ECB meeting.
• Google will invest at least €13 billion in AI infrastructure in Finland over two years.

European shares declined to over a one-month low on Wednesday, mirroring a surge in crude oil prices above $100 a barrel, which heightened inflation concerns and dampened investor risk appetite. The pan-European STOXX 600 index fell 1.4% to its lowest point since late July, with most regional stock markets also experiencing sharp declines.

Brent crude futures surpassed the $100 mark for the first time since late July following reports of tanker attacks in the Middle East, raising fears of further disruptions to energy supplies. The energy sector was the only segment to trade in positive territory, up 0.3%, while all other major sectors registered losses. The Euro STOXX volatility index climbed to its highest level in a week.

Analysts noted that higher oil prices contribute to increased inflation expectations, potentially leading to further interest rate hikes and higher bond yields, which negatively impacts equities. Investors showed reluctance to take on risk ahead of upcoming central bank meetings and key economic data releases.

Euro zone government bond yields reached fresh multi-year highs before the European Central Bank's scheduled meeting, with markets anticipating rate hikes. There is a concern that the ECB might overreact to oil price movements, potentially harming the broader economy.

In company news, Fortum, the Finnish energy group, saw its shares climb 15.8% after securing a power purchase agreement with Google, which plans to invest significantly in AI infrastructure in Finland. Auto1 Group SE shares dropped 6.4% following the resignation of its CFO, while Zara owner Inditex fell 3.6% after reporting weaker-than-expected quarterly profits.