All three research agents have now reported. The Q3 calendar agent surfaced a few additional details I should incorporate — notably the **SNB September 25 meeting**, the **Swedish election September 13**, the **July 4 Trump tariff deadline**, and key earnings dates (Shell July 30, BP August 4, Siemens August 1). Let me refine the post to include these confirmed catalysts.

Here’s the final post:

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The quarter in Europe markets

European equities delivered a broad, forceful rally in Q2 2026. The Euro Stoxx 50 closed the quarter at 6,328.1 — up 13.6% and a record closing high. Italy’s FTSE MIB led the continent at 51,682.0, gaining 16.6%, while Spain’s IBEX 35 added 14.2% to finish at 19,471.9. The AEX rose 12.5% to 1,080.2 and Switzerland’s SMI climbed 11.1% to 14,193.9. Germany’s DAX gained 10.2% to close at 24,995.8, and France’s CAC 40 added 7.5% to reach 8,404.0.

The outlier was the FTSE 100, which managed only +3.2% to 10,497.1 — dragged lower by its heavy weighting toward energy majors hit by collapsing oil prices. The dominant story of Q2 was a violent sector rotation: capital flooded into semiconductors and industrials while flowing out of energy and legacy autos. That split produced one of the widest dispersions between the best and worst European large-caps in recent quarters.

Winners and losers

Infineon was the quarter’s standout, surging 114.9% as AI data-centre demand for power semiconductors accelerated. The company confirmed a silicon carbide supply deal targeting AI data-centre power systems in late March and hit an all-time high of EUR 88.83 on June 22, with full-year revenue guidance raised above EUR 16 billion. ASML followed with a 54.1% gain, underpinned by a backlog exceeding EUR 45 billion and record EUV lithography orders from SK Hynix and Samsung. Siemens (+36.7%) rode the same electrification and industrial-automation wave.

Mediobanca climbed 62.3%, driven by Monte dei Paschi di Siena’s takeover — MPS secured 86.3% of the bank’s shares in a EUR 16 billion cash-and-share deal, with merger completion now expected by year-end. In Switzerland, ABB (+38.5%) and Richemont (+34.6%) rallied alongside UBS (+34.7%), while Adidas (+33.7%) extended a post-restructuring re-rating after Q1 operating profit rose 16% and gross margins hit a record 51.6%.

The losers told an equally clear story. BP dropped 23.0% and Shell fell 18.1% after a US-Iran framework deal eased supply fears and Brent crude posted its steepest quarterly decline since 2020, falling roughly 20% toward $70. German automakers were the other casualty: BMW slumped 22.4% after issuing a profit warning citing China demand weakness and tariff costs worth an estimated 1.25 percentage points of margin, while Volkswagen shed 13.5% as US tariffs shaved EUR 0.6 billion from Q1 operating profit. Stellantis (-17.9%), TotalEnergies (-14.9%), ENI (-16.1%) and Deutsche Telekom (-22.9%) completed the bottom of the table.

What drove Q2 2026

Three forces converged. First, the ECB hiked rates by 25 basis points on June 11 — its first increase since September 2023 — lifting the deposit facility rate to 2.25%. The trigger was a sharp reversal of the 2024-25 disinflation trend: eurozone HICP climbed to 3.2% in May, with energy prices surging 10.8% on Middle East conflict spillover and core inflation broadening to 2.6%. Markets had partially priced the move, and equities held their gains after the announcement.

Second, the US-Iran framework deal restructured the oil market’s risk premium overnight, sending Brent lower and punishing Europe’s energy complex. The deal raised the prospect of restored commercial shipping through the Strait of Hormuz and additional Iranian supply reaching global markets.

Third, a US-EU trade agreement — struck in May and given final Council approval on June 25 — capped most tariffs at 15%, defusing the immediate threat of 25% levies on European autos and semiconductors. The deal gave European exporters breathing room, though Trump set a July 4 deadline for full implementation or escalation. The Bank of England held at 3.75% throughout Q2, though hawkish dissent grew from one to two MPC members voting for a hike by June, and the SNB held its policy rate at 0.00%.

Q3 2026 outlook

The setup entering Q3 is a market that has run hard into a wall of central-bank meetings and a live tariff deadline. The July 4 US deadline for full EU trade-deal implementation is the nearest binary event — an escalation to 25% on autos would hit BMW and VW again at a point where both are already near multi-year lows.

The ECB meets July 23 in Frankfurt, where the question is whether June’s hike was a one-off or the start of a tightening cycle — the answer depends on whether the June and July inflation prints show energy pass-through broadening or fading. The Bank of England follows on July 30 with an updated Monetary Policy Report; the two hawkish dissenters from June make a rate hike a live possibility. The ECB meets again September 10, the BoE on September 17, and the SNB on September 25. Jackson Hole falls on August 27-29.

Earnings will test the semiconductor thesis directly. ASML reports July 15, SAP on July 23, Nestlé on July 23, LVMH on July 28, Shell on July 30, Siemens on August 1 and BP on August 4. If ASML’s backlog confirmation holds and order momentum extends, the tech-industrial leadership from Q2 has fundamental backing. If not, the 54% Q2 run leaves room for a sharp de-rating. Sweden’s general election on September 13 is the quarter’s scheduled political event.

What we’re watching

Four things will define Q3 for European markets. The eurozone inflation trajectory through July and August — whether the energy-driven spike broadens into services or fades — will determine if the ECB hikes again at the September 10 meeting or pauses at 2.25%. The July 4 US tariff deadline and any subsequent escalation path is the single largest policy risk for German industrials and autos. ASML’s July 15 earnings will either validate or challenge the semiconductor premium that drove Q2’s winners. And oil’s direction from here — whether Brent stabilises near $70 or breaks lower on increased Iranian supply — sets the floor for the FTSE 100’s energy heavyweights and the ceiling for the inflation hawks at the ECB.