European Markets Slip as Oil Prices Rise and AfD Wins Saxony-Anhalt Election

European equity indices were largely flat on Monday, with the pan-European STOXX 600 ending at 649.9 points. Germany’s DAX fell 0.2%, while the Swiss SMI dropped 0.8%. Energy shares gained about 1.2% as Brent crude hovered near six-week highs after renewed U.S.–Iran tensions tightened oil supplies in the Strait of Hormuz. Higher oil prices have revived inflation worries, prompting a global bond sell-off and sharpening expectations that the European Central Bank (ECB) will raise rates by 25 basis points on Thursday. The Federal Reserve’s upcoming CPI data are also under close watch after a strong U.S. jobs report.

Reuters

Over the weekend, the far-right Alternative for Germany (AfD) secured 44% of the vote in the Saxony-Anhalt state election, the party’s strongest regional showing to date. Although the AfD fell short of an absolute majority, the result introduced uncertainty about coalition formation and signaled a shift toward tougher immigration policies, closer ties with Russia, reduced support for Ukraine, and potential euro-zone withdrawal. The outcome nudged the DAX lower, though market reaction remained muted.

Reuters

• Novartis shares fell 3.2% after its cholesterol drug failed in a closely watched study.

The Irish Times

• Italy’s Lottomatica rose 7.7% following details on a proposed merger with Spain’s Cirsa, whose shares climbed 6.1%.

Reuters

• Irish indices slipped: the Irish market fell nearly 1%, with Glanbia down 3% and Kerry Group down 1.6%.

The Irish Times

• Energy giants BP and Shell each gained about 1% on the London FTSE 100, which closed 0.1% lower at 10,822.13 points.

The Irish Times

Deutsche Bank now expects the ECB to follow its September rate hike with an additional quarter-point increase in December, despite policymakers’ limited appetite for further tightening. Traders continue to price in another rate rise by year-end and a further increase in 2027. Analysts note that the combination of higher oil prices and political uncertainty is reinforcing expectations of tighter monetary policy across the euro zone.

The Irish Times

“The AfD’s historic Saxony-Anhalt victory has nudged the DAX lower, but the muted reaction suggests investors see the result as a political warning rather than an immediate economic threat,” — Axel Rudolph, chief technical analyst at IG

Reuters