TLDR
- European stock indexes dropped to multi-month lows on Tuesday
- Brent crude surged past $113 a barrel after attacks on Saudi pipeline infrastructure
- Markets are pricing a 90% chance the Fed raises rates by 25 basis points on Wednesday
- AI leaders at OpenAI and Anthropic called for a pause in advanced AI development
- Trustpilot fell over 18% after swinging to a net loss in the first half of 2026
European equity markets fell sharply on Tuesday, with major indexes sliding to their lowest levels in months. A mix of geopolitical tension, rising oil prices, and expectations of a Federal Reserve rate hike all weighed on investor sentiment.
The pan-European STOXX 600 dropped 0.35% to hit its lowest point in over three months. France’s CAC 40 fell 0.4% to a nearly four-month low, while the UK’s FTSE 100 and Germany’s DAX also declined.
Oil Prices Rise After Saudi Pipeline Attack
Energy costs were a key pressure point for European markets. Brent crude jumped 1.2% to trade above $113 a barrel, continuing a multi-week rally.
Saudi Arabia blamed Iran-backed groups in Iraq for an attack on its East-West oil pipeline. Officials warned the disruption could affect up to 4% of global oil supply.
Yemen’s Houthi militants also launched fresh strikes on Saudi territory and Red Sea shipping lanes on Monday. Regional peace talks in Oman were abruptly postponed, reducing hopes for stability in the area.
The previous session also saw European stocks fall. On Monday, the CAC 40 dropped 0.76% and the DAX lost 0.30%, partly linked to tensions around the Arctic as twelve EU nations called for a stronger European presence there amid concerns over Russia.
Fed Meeting Puts Markets on Edge
The Federal Reserve began its two-day policy meeting on Tuesday, with markets pricing a 90% probability of a 25 basis point rate hike on Wednesday. It would be the Fed’s first rate increase since mid-2023.
The European Central Bank raised rates by a quarter point to 2.50% last week. The back-to-back moves by major central banks have kept bond yields elevated.
The U.S. 10-year Treasury yield hovered near 4.98%, close to levels last seen in 2007. Germany’s 10-year Bund yield held near 3.51%.
Analysts said the bigger question is not whether the Fed hikes, but what signals Chair Jerome Powell sends about future moves. A hot U.S. inflation reading last Friday added to concerns that more tightening could follow.
Tech stocks across Frankfurt and Amsterdam came under pressure after executives at OpenAI and Anthropic jointly called for a temporary slowdown in advanced AI development. The call cited the need for global risk-management standards.
ASML recovered slightly, gaining 1.6%, while BE Semiconductor rose around 1.2% after heavier losses the day before.
Trustpilot fell more than 18% after posting a net loss in the first half of 2026. The company was hit by a $6 million charge from an antitrust fine and U.S. tax provisions.
Puig Brands dropped 3.5% after announcing a deal worth €1.2 billion to buy the remaining 50% stake in skincare brand ISDIN.
Markets now look to the Fed’s decision on Wednesday for the next major signal on direction.
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