European stocks post biggest drop in two weeks as oil hits $100

European equities suffered their steepest single-day decline in more than two weeks on Thursday as a combustible mix of surging oil prices, hawkish central bank rhetoric, and weak earnings dragged the pan-European STOXX 600 down 1.3% to 638.5 points.Investing.com

The sell-off came as Brent crude futures crossed $100 a barrel for the first time since late May after Yemen's Houthi forces claimed drone and missile strikes on two Saudi oil tankers — the Encelia and the Layla — in the Red Sea. The attacks widened disruption to global oil shipping through both the Red Sea and the Strait of Hormuz, extending a five-day rally that has lifted Brent more than 33% over the past month.The Mighty 790 KFGO | KFGO+2

Central Bank Hawkishness Adds Pressure

The European Central Bank held its deposit facility rate steady on Thursday, as expected, but ECB President Christine Lagarde warned that surging crude oil prices driven by Middle East tensions create risks of an imported energy inflation rebound across Europe. Markets interpreted Lagarde's comments as suggestive of a delay to a planned September rate cut, with all future policy adjustments remaining "fully data-dependent".European Central Bank+3

Earnings Disappoint Across Sectors

Corporate results compounded the downward pressure. Nestlé shares tumbled nearly 8% — their worst day since 1989 — after the Swiss food giant announced a deal to sell half its waters business, which includes brands like Perrier and S.Pellegrino, to Platinum Equity for €3 billion in cash, while first-half volume growth disappointed investors. STMicroelectronics ↘ 1.78% plunged 17.7% after the chipmaker forecast third-quarter revenue slightly below market expectations, dragging the broader technology sector down 2.9%. Finland's Stora Enso fell about 8.5% on a quarterly operating profit miss.The Edge Malaysia+1

Not all names suffered. TotalEnergies ↗ 2.03% gained 2.5% after reporting its strongest quarterly earnings in nearly three years, while Dassault Aviation ↗ 2.06% jumped nearly 8% on higher first-half results.Investing.com+1

Geopolitical Escalation in Focus

The market turbulence unfolded against a backdrop of intensifying conflict in the Middle East. U.S. strikes on Iran have continued for a twelfth consecutive day, and President Donald Trump warned on Truth Social Thursday that "major military punishment" would be inflicted on Iran and the Houthis if attacks on vessels continue. The STOXX 600 has struggled to break out of a narrow range this month as simmering regional tensions reinforce inflation fears.AL-MONITOR: The Middle Eastʼs leading independent news source since 2012+2