European stock markets started the week with reduced liquidity due to the Labor Day holiday in the United States, in a context marked by anticipation surrounding the European Central Bank meeting next week, when Christine Lagarde is expected to announce the raising of benchmark interest rates. Eurozone inflation in August above 3% and the German 10-year Bund at its highest level since 2011 place the ECB in a difficult position, with the market almost certain of a 25 basis point increase at the September 10th meeting. The interest rate hike makes credit more expensive for businesses and families, which tends to slow the economy and push stock markets lower.
Oil prices have been the major catalyst of the moment, driven by the escalation of the conflict between the United States and Iran, which enters its seventh month with no end in sight. US forces attacked three Iranian oil tankers in the Persian Gulf, after Iran launched ballistic missiles at US Navy vessels. This conflict has disrupted global energy supply and OPEC+'s ability to control prices has diminished, with Brent reaching 92.07 dollars last week.
The OPEC+ alliance, led by Saudi Arabia and Russia, decided to maintain oil output in October after a digital ministerial meeting. Several of the alliance's 21 members face problems due to disruptions in oil tanker traffic in the Strait of Hormuz and the Red Sea, as well as Ukrainian attacks on Russian oil facilities. Geopolitical risk has pushed short-term oil prices higher, with gas at the European benchmark at a three-and-a-half-year high and stocks at a historic low for the season.
On the diplomatic front, Donald Trump's special envoys Steve Witkoff and Jared Kushner visited Moscow and Kyiv to present a peace proposal to end the war in Ukraine, now in its fifth year of large-scale invasion. It was the duo's eighth visit to Moscow and the first to Kyiv since the war began. Vladimir Putin ordered the suspension of attacks on Kyiv for three days, coinciding with the visit, in a gesture that reflects an optimistic tone from the US and truces in the capitals, although the absence of tangible progress and the maintenance of positions on both sides limit the impact of the peace proposal.
