European Midday Briefing : Shares Fall as Brent Nears $100

MARKET WRAPS

Stocks:

European shares were lower Tuesday, with higher oil prices weighing on sentiment.

Oil prices extended gains, with Brent crude now above $98 a barrel as escalating attacks in the Middle East fuel fears over prolonged supply disruptions.

“Markets are increasingly pricing a prolonged Mideast conflict,” said Goldman Sachs. “The options-implied probability of Brent above $100 in March 2027 has risen from around 6% a month ago to about 25%.”

Investors are also awaiting the European Central Bank decision on Thursday. A 25-basis-point interest-rate hike is the most likely scenario, according to State Street Investment Management.

“The real significance of the meeting is therefore likely to lie less in the interest-rate decision itself than in the signals regarding the future course of monetary policy,” it added.

Pimco expects an extended pause beyond September, “although any emerging risks to inflation expectations could compel the ECB to continue its hiking efforts.”

U.S. Markets:

Stock futures were down Tuesday as investors returned from the Labor Day weekend.

Investors are awaiting U.S. inflation data Friday which will set the stage for next week’s Federal Reserve meeting.

Forex:

The dollar fell to a two-week low against a basket of currencies as strong gains for the Japanese yen continue.

Bonds:

Eurozone government bond yields were marginally lower, awaiting the European Central Bank’s interest-rate decision and potential hints at the future policy path on Thursday.

Treasury yields edged lower in early trade as their trade resumes after Monday’s Labor Day holiday, shrugging off a slight increase in oil prices.

Energy:

In early European trading, the global oil benchmark rose 1.5% to $98.45 a barrel, while WTI futures climbed 2.7% to $93.93 a barrel.

Metals:

Gold prices fell despite a weaker dollar, with investors now awaiting U.S. inflation data for more cues on the Federal Reserve’s decision on interest rates.

Copper

Copper prices climbed to a fresh record on the London Metal Exchange as distortions to trade flows due to concerns over potential U.S. tariffs collided with supply challenges at key mines worldwide.

Iron ore

Iron ore prices were higher in early trade. Near-term demand is expected to improve as steel mills restock ahead of the holiday, said Baocheng Futures.

EMEA HEADLINES

Novartis’s Latest Trial Setback Sinks Stock

Novartis shares plunged after the Swiss drugmaker said an experimental neuromuscular medicine missed the primary goal in a late-stage clinical trial, the latest blow to its efforts to find new growth engines.

Shares in Novartis slid 10% shortly after the opening bell Tuesday, wiping out most of the stock’s gains since the start of the year. If maintained until close, this would mark Novartis’s worst one-day percentage drop since 1987, according to FactSet data.

German Exports Decline for First Time in Six Months

German exports in July retreated for the first time since January, slowing a nascent recovery in net trade that helped drive the country’s economic growth in the first half of the year.

Exports declined 0.8% on month in July to 138.2 billion euros, or $160.62 billion, Germany’s statistics agency said Tuesday.

Mistral AI Exceeds $24 Billion Valuation After Samsung-Led Investment Round

Mistral AI completed a new funding round led by South Korea’s Samsung Electronics that lifted its valuation above $24 billion, giving it additional firepower to invest in model development and grow its customer base.

The French artificial-intelligence startup said it had raised 3 billion euros, equivalent to $3.48 billion, from a pool of existing investors like Samsung and Dutch chip-equipment giant ASML Holding as well as new backers such as Advent, funds and accounts managed by BlackRock and the Grand Duchy of Luxembourg.

AI Use Contributes to Global Decline in Student Reading Skills, OECD Says

The widespread use of AI tools and social media platforms has contributed to a sharp deterioration in the reading skills of high-school students around the world, according to the OECD, with potential implications for the long-term economic outlook.

The Organization for Economic Cooperation and Development on Tuesday said tests taken last year by 760,000 15-year-olds in 91 countries and economies revealed a big drop in scores compared with a decade earlier, reflecting a reduced ability to evaluate information, think critically and bring together multiple pieces of evidence.

GLOBAL NEWS

ECB Set to Raise Key Rate Again, Signal Caution on Further Moves

The European Central Bank is expected to raise its key interest rate Thursday for the second time since the start of the war between the U.S. and Iran, but signal caution about further moves that would take borrowing costs to levels that restrain economic activity.

The eurozone’s annual rate of inflation rose in August to 3.3%, the highest level in almost three years and well above the ECB’s 2% target. However, there were no signs of the second-round effects that policymakers always fear when energy prices shoot higher, as they have since the war closed the Strait of Hormuz.

AI Use Contributes to Global Decline in Student Reading Skills, OECD Says

The widespread use of AI tools and social media platforms has contributed to a sharp deterioration in the reading skills of high-school students around the world, according to the OECD, with potential implications for the long-term economic outlook.

The Organization for Economic Cooperation and Development on Tuesday said tests taken last year by 760,000 15-year-olds in 91 countries and economies revealed a big drop in scores compared with a decade earlier, reflecting a reduced ability to evaluate information, think critically and bring together multiple pieces of evidence.

China’s Trade Surplus Widens as Export Growth Accelerates

China’s exports grew more than expected in August, supported by the global AI build-out, though the surge in overseas shipments could fuel tensions over imbalances with trading partners.

Exports rose 25.0% from a year earlier in August, up from a 23.9% increase in July, according to data released by the General Administration of Customs on Tuesday. The reading also topped the 23.8% growth expected by economists in a Wall Street Journal survey.

Trump’s Latest Target for a Name Change: New Mexico

President Trump made a series of social-media posts over the holiday weekend calling for changing New Mexico’s name to “New America,” his most ambitious-and unlikely-attempt yet to remake the North American map.

Trump started late Sunday with a message that said “many people” have suggested making the name change. “So much more prestigious and beautiful for the people of that potentially incredible State,” the post said. “Wow, I Love It!!!”

Greenland Seeks to Turn Peril Into Profit After Trump’s Threats to Take It Over

Greenland is cashing in on President Trump’s threats and talk of dealmaking by using its position as a strategic Arctic linchpin to draw investments from European allies.

Ursula von der Leyen, president of the European Union’s executive arm, visited Greenland on Monday and pledged investments worth 200 million euros, equivalent to about $230 million, in minerals, satellite communications and renewable energy.

Australian Government to Allow Opt Out Of Social Media Algorithms

SYDNEY-The Australian government is pushing toward stricter rules for technology giants with plans to introduce new requirements that would give social media users the ability to opt out of algorithms that shape their social media feeds.

The move by the Labor government follows its introduction of a social media age ban in 2025, and aims to ensure consumers have more choice online, Prime Minister Anthony Albanese said Tuesday.

Write to priscila.barrera@wsj.com

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This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

09-08-26 0510ET