Here’s the post body:

—

The month in Europe markets

European equities closed July 2026 with gains across all eight major indices, though the spread between leaders and laggards told a story of sector rotation rather than uniform strength. The FTSE 100 led the board at 10,868.1, up 3.5% month-over-month — its energy-heavy composition catching a direct tailwind from crude’s surge after the US-Iran Strait of Hormuz confrontation. The DAX followed at 25,629.2, gaining 2.5%, while the AEX added 1.8% to reach 1,099.2. The CAC 40 closed at 8,509.6, up 1.3%, and the Euro Stoxx 50 — the broadest large-cap benchmark — finished at 6,358.0 with just a 0.5% advance, held back by its semiconductor weight. Italy’s FTSE MIB closed at 52,173.0 (+1.0%), Spain’s IBEX 35 at 19,782.9 (+1.6%), and Switzerland’s SMI at 14,346.1 (+1.1%). The dominant theme was energy-over-tech: the Strait of Hormuz disruption rewarded hydrocarbon producers and punished chip exporters exposed to US-China trade friction.

Winners and losers

The top of the leaderboard was a mix of energy windfalls and idiosyncratic earnings beats. Randstad (RAND.AS) surged 44.8% after its Q2 report showed organic revenue growth of 1.9% and net income up 79% year-over-year — a decisive turn in the staffing cycle after a prolonged downturn. Repsol (REP.MC) gained 22.9% and Eni (ENI.MI) rose 16.3%, both riding Brent crude’s spike above $85 after US strikes on Iran disrupted transit through the Strait of Hormuz. Wolters Kluwer (WKL.AS) climbed 20.3%. BP (BP.L) and Shell (SHEL.L) added 18.3% and 15.4% respectively — Shell’s restarted £3 billion buyback programme gave it an extra bid. SAP (SAP.DE) rose 17.7% on a 27% surge in cloud backlog to €22.9 billion, though it tempered its non-IFRS profit outlook after the Dremio and Prior Labs acquisitions. Capgemini (CAP.PA) rounded out the gainers at +16.5%.

The sell-off in semiconductors was sharp. Infineon (IFX.DE) dropped 24.5% after missing Q2 consensus on a deepening automotive and industrial chip downturn. ASML (ASML.AS) fell 16.6% — despite hiking its sales forecast on strong AI-related orders — as US lawmakers introduced bipartisan legislation to ban DUV lithography equipment exports to China outright, threatening roughly 20% of ASML’s 2026 revenue base. Ericsson (ERIC-B.ST) declined 13.3%, Adidas (ADS.DE) lost 11.1%, and AstraZeneca (AZN.L) gave back 10.4%. ABB (ABBN.SW) fell 9.2%, Danone (BN.PA) 5.9%, and Givaudan (GIVN.SW) 5.6%.

What drove July 2026

Three forces shaped the month. First, the US-Iran military escalation was the dominant macro driver. US strikes on Iran on July 8 sent Brent from the mid-$70s above $83; follow-on exchanges over the Strait of Hormuz on July 13-14 pushed it to $85.92 as transit traffic through the strait dropped by more than half. Trump’s announcement of a reinstated Hormuz blockade with a 20% cargo fee cemented the energy bid. Second, the ECB held all three key rates unchanged at its July 23 meeting — deposit rate steady at 2.25% — describing the pause as “tactical” after June’s surprise 25 basis point hike. The Bank of England followed on July 29, holding at 3.75% in a 6-3 vote with three members pushing for a hike. Third, the macro data improved: the Eurozone Composite PMI rose to 51.9 from 50.0, the first expansion in four months, with German manufacturing output growing for the first time since March. Eurozone Q2 GDP came in at +0.4% quarter-over-quarter, and July flash CPI ticked up to 2.9% from 2.8%.

August 2026 outlook

August is a central-bank blackout month for Europe — no ECB meeting (next: September 10) and no BoE decision (next: September 17). That removes the biggest single-event risk and shifts attention to the data pipeline and the global rates conversation. Three dated catalysts stand out. On August 14, Eurostat publishes the second estimate of Q2 GDP (flash was +0.4%); any upward revision would reinforce the ECB’s “tactical pause” framing and push September rate expectations toward another hold. On August 21, the S&P Global flash PMIs for August drop — July’s 51.9 composite set a high bar, and the manufacturing component in particular will signal whether the expansion broadened or stalled as energy costs fed through. On August 27-29, the Jackson Hole Economic Symposium convenes under the theme “Financial Innovation: Implications for Payments and Policy.” ECB President Lagarde typically speaks at Jackson Hole, and her remarks will be the last major signal before the September 10 decision. Flash CPI for August lands on August 31 — July’s 2.9% reading, with energy running at +10% year-over-year, leaves little room for the ECB to signal an early reversal of June’s hike.

The sector setup is bifurcated. Energy names enter August with momentum but face mean-reversion risk if Hormuz transit normalises. Semiconductors are oversold on a regulatory overhang that may take months to resolve — ASML’s order book is strong, but the policy tail risk is binary. Staffing and cyclicals (Randstad, Capgemini) are pricing in a recovery that the PMI data now tentatively supports.

What we’re watching

Four things will define August for European markets. First, Strait of Hormuz transit volumes — any de-escalation in shipping flows would pull the floor from under energy and test whether the FTSE 100’s 3.5% July gain can hold. Second, the August 21 flash PMIs: July’s expansion needs confirmation or it becomes a one-month blip. Third, Lagarde at Jackson Hole (August 27-29) — her tone on inflation persistence versus growth support will set the September ECB playbook. Fourth, any concrete movement on the US DUV export ban legislation — ASML and the broader European semiconductor supply chain trade on each headline.