European stocks closed sharply lower on Monday as higher oil prices reinforced expectations of further interest rate hikes by the European Central Bank. The Euro STOXX 50 fell 0.9% to 5,426, while the STOXX Europe 600 declined 0.6% to 651.
Escalating tensions between the US and Iran, including a new round of strikes, drove oil prices significantly higher. The resulting increase in energy costs helped push inflation higher in Germany, Spain, and France in August.
Stocks linked to AI infrastructure posted steep losses ahead of earnings reports from Broadcom and Palo Alto Networks this week, keeping volatility elevated across the sector. ASML and Siemens Energy dropped 2.9% and 5%, respectively. Industrials also retreated, with Airbus, Schneider Electric, and Rheinmetall falling between 2.75% and 4%.
For August as a whole, the Euro STOXX 50 rose 1%, and the STOXX Europe 600 added 0.3%, lagging other benchmarks due to its heavier weighting in UK mining and pharmaceutical stocks.
