Europe close: Markets in the red as oil prices fall

26th Jun 2026 16:22

(Sharecast News) - European shares slumped on Friday as the technology sell-off continued, with investors increasingly concerned about a potential bubble in artificial intelligence stocks.

The pan-European Stoxx 600 fell 0.67% to 635.92.

Germany's DAX dropped 1.25% to 24,681.72, France's CAC 40 declined 0.55% to 8,384.87, and London's FTSE 100 slipped 0.21% to 10,508.02.

In commodities, Brent crude futures were last down 4.52% on ICE at $71.86 per barrel, while the NYMEX quote for West Texas Intermediate dropped 4.06% to $69.00.

Patrick Munnelly, market strategy partner at TickMill, said London drifted lower as the FTSE 100 gave back some of its recent gains, hit by a global technology sell-off, weaker oil prices and renewed caution around the Middle East despite easing supply concerns.

"The tone was defensive rather than panicked, but the leadership that powered the index earlier in the week faded as investors moved back toward staples and lower-beta names," he said.

Wall Street shares had closed lower overnight after US inflation accelerated in May, with the Federal Reserve's preferred gauge posting its fastest core increase since 2023.

The Bureau of Economic Analysis said the core personal consumption expenditures price index rose 0.3% on the month and 3.4% year-on-year, both in line with expectations.

The annual core PCE rate was the highest since October 2023.

Headline PCE inflation rose 0.4% on the month and 4.1% on the year, the strongest annual reading since April 2023, although the monthly figure was slightly below forecasts.

Munnelly said the technology sell-off provided the broader global backdrop, even though the FTSE 100 has limited direct exposure to the sector.

"When investors reassess long-duration growth, AI positioning and inflation risk, the spillover usually hits cyclicals, miners, industrials and emerging-market-sensitive financials," he said.

"That pressure kept London on the back foot."

Chris Beauchamp, chief market analyst at IG, said dip buyers had moved in during the afternoon to stabilise markets after a wave of selling over the previous 18 hours.

"The recovery is a testament to the staying power of this rally, but holding on to gains has proved problematic throughout the week," he said.

"Fortunately the sessions before US Independence Day tend to give bulls the upper hand, potentially shifting the tone next week."

Oil prices were also sharply lower as traders continued to price in the reopening of the Strait of Hormuz and reduced the geopolitical risk premium built into crude during the conflict.

"Dips in stocks get bought, while bounces in oil get sold, and heavily so," Beauchamp said.

"Both WTI and Brent teeter on the brink of new multi-month lows as Hormuz shipping continues without much interruption."

Euro area consumers less worried about inflation

On the economic front, eurozone consumers became less worried about inflation in May, according to the European Central Bank's latest Consumer Expectations Survey.

Median inflation expectations for the next 12 months fell to 3.5% from 4.0% in April, although they remained above the ECB's 2% target.

Longer-term expectations were unchanged, with three-year inflation expectations holding at 2.9% and five-year expectations steady at 2.4%.

The ECB said uncertainty around inflation expectations had eased from April, although it remained high compared with levels seen before the recent Middle East conflict.

The survey, conducted between 7 May and 1 June, took place before the US and Iran reached an initial agreement to end fighting and reopen the Strait of Hormuz, whose closure had pushed energy prices higher in recent months.

Households also became slightly less pessimistic about the economy, with expected growth over the coming year improving to -1.7% from -2.2%.

Income growth expectations edged up to 1.0% from 0.8%, while expected unemployment in 12 months' time rose slightly to 11.3% from 11.2%.

The figures suggested consumers saw recent inflationary pressures starting to ease without a material shift in their longer-term outlook.

Across the Atlantic, US wholesale inventories rose more than expected in May.

The Census Bureau said inventories increased 0.3% month-on-month to $943.9bn, following a 0.7% gain in April and ahead of expectations for a 0.2% rise.

It was the fourth consecutive monthly increase, although the pace continued to moderate from March.

Durable goods inventories rose 0.3% after a 0.9% increase in April, while non-durable inventories gained 0.5%, accelerating from 0.3% the previous month.

On an annualised basis, wholesale inventories were 4.3% higher.

Tech stocks under pressure, Wise rises on results

In equity markets, technology stocks remained under pressure.

ASM International fell 4.34%, Infineon Technologies dropped 4.52% and BE Semiconductor Industries lost 2.21%.

Elsewhere, Zalando slumped 6.32% after Germany's financial regulator launched a probe into the retailer's accounts.

On the upside, Wise Group rose 7.1% after the fintech posted results.

Reporting by Josh White for Sharecast.com.