Market Wrap: Energy Leads Gains in Europe, ASML Rebounds 🔼 Alcon Rises 4% After Earnings

• The Stoxx Europe 600 remains close to record highs, but European equities have entered a wait-and-see phase in which geopolitical developments and energy prices are having a greater impact on short-term sentiment.
• Negotiations over the Strait of Hormuz have reached another impasse after the Donald Trump administration hardened its stance toward proposals put forward by Iran and Oman, reducing the chances of a swift de-escalation in the region.
• Brent crude has climbed above $84 per barrel to its highest level since late July, supporting European energy stocks while simultaneously raising costs for industry and increasing the risk of renewed inflationary pressure.
• The European earnings season remains broadly solid, particularly in healthcare, energy infrastructure and defense, although technology and industrial companies are facing a much more demanding response from investors.
• Among individual stocks, Alcon stands out, with shares rising almost 4% after the company raised its full-year earnings outlook.

Markets are beginning to take a more cautious view of the AI investment boom. Heavy spending on data centers, semiconductors and AI infrastructure is no longer enough to sustain share-price gains unless it is accompanied by a clear path toward rapid revenue growth. For equity markets, the combination of high energy prices and weaker economic growth is becoming particularly important: more expensive oil can increase cost and inflation pressures, while the latest weak U.S. labor market report has raised concerns about the pace of growth in the world’s largest economy. The main macroeconomic event will be Wednesday’s U.S. CPI report. Softer inflation could ease concerns related to higher energy prices and support expectations for a more accommodative Fed, while a stronger-than-expected reading could put renewed pressure on equity valuations, particularly in the most interest-rate-sensitive areas of the market.

EU50 chart (D1 timeframe)

Euro Stoxx 50 futures are not experiencing any significant spike in volatility today, with sentiment across European markets remaining relatively calm. U.S. index futures are also trading without major changes.

Source: xStation5

Euro Stoxx 50 – market overview

The Euro Stoxx 50 remains in a very strong trend, up 12.9% year-to-date and 20.3% over the past 12 months, with the index trading close to all-time highs. Market breadth remains particularly constructive: 72% of constituents are trading above their 50-day moving average and 68% above their 200-day SMA, indicating that the rally is not being driven solely by a handful of the largest companies. At the same time, a P/E ratio of around 20x shows that investors are already paying a premium for European blue chips, meaning that further gains will require confirmation from corporate earnings and guidance. In the short term, the market therefore remains fundamentally strong, but after gaining 4.2% over the past month and approaching record highs, it has become more vulnerable to profit-taking in response to negative macroeconomic or geopolitical catalysts.

Source: XTB Research

Stock heatmap – ASML and energy offset weaker segments

The Euro Stoxx 50 heatmap points to significant rotation within the index, with relatively calm benchmark performance masking much larger moves among individual stocks. ASML (+0.94%) remains one of the index’s key pillars due to its substantial weighting, while TotalEnergies (+1.91%) and Eni (+1.88%) are benefiting from the renewed rise in oil prices. On the other side, AB InBev (-2.31%), Prosus (-1.47%) and Airbus (-1.42%) are among the laggards, indicating that today’s gains are far from broad-based. This market structure points primarily to capital rotation between sectors rather than a broad risk-on move across European equities. The strength of European energy stocks alongside higher oil prices is also visible more broadly across the continent.

Source: XTB Research

Higher oil prices support energy stocks, weigh on travel

Elevated oil prices are creating clear divergence between individual sectors of the European equity market. The energy sector gained around 1% as crude prices reached their highest level this month. The next move may depend largely on developments surrounding the Strait of Hormuz and upcoming macroeconomic data.

• The energy sector gained around 1%, supported by oil prices climbing to their highest levels in August.
• Donald Trump responded to Iran’s conditions with demands of his own, including compensation payments, potentially further complicating negotiations over the reopening of the Strait of Hormuz.
• Travel and leisure stocks fell around 0.7% as higher fuel prices renewed concerns over operating costs.
• European technology stocks performed better, with the sector index gaining around 0.4%.
• Europe’s earnings season is approaching its final stages, shifting market attention toward macroeconomic data, particularly eurozone employment and GDP figures.

Leaders and laggards – market rewards exposure to higher oil prices

TotalEnergies (+1.91%) and Eni (+1.88%) are among the strongest performers, showing how higher crude prices are once again translating directly into relative strength among energy producers. ASML is also performing strongly, with shares up 0.94% during the session and as much as 66.7% year-to-date, although its P/E ratio of around 55x illustrates how much future growth is already priced into the stock. On the downside, AB InBev (-2.31%), Adyen (-1.53%), Prosus (-1.47%) and Airbus (-1.42%) stand out, once again highlighting the selective nature of today’s trading. From a broader perspective, however, the strongest signal comes from the energy sector. TotalEnergies and Eni are up approximately 38.5% and 48.9% year-to-date, respectively, suggesting that today’s move is a continuation of an established trend rather than merely a one-day reaction to higher oil prices.

Source: XTB Research

Sectors – technology and energy take the lead

Technology is the strongest driver of today’s market, gaining 1.32%, while energy is another clear leader with a 1.60% advance. This creates an interesting combination of two very different investment themes: technology is benefiting from structural demand for semiconductors and AI, while energy is responding primarily to higher oil prices and the geopolitical risk premium. Communication services (-1.80%) are the largest drag, while declines in utilities (-0.82%) and materials (-0.49%) are also limiting the broader index move. From an index perspective, the key question is whether technology can maintain its momentum, as the sector’s substantial weighting means that ASML and other large constituents may have a greater impact on the direction of the Euro Stoxx 50 than the overall number of sectors trading higher.

Source: XTB Research

Alcon rallies after earnings and higher profit guidance

Alcon shares are rising sharply following the company’s second-quarter results, as investors focus primarily on an improved outlook for the full 2026 financial year. Revenue increased 8% year-over-year and slightly exceeded analysts’ expectations, while management raised its adjusted EPS and operating margin guidance. The positive share-price reaction suggests that investors view the one-off PowerVision charge as less relevant to the underlying health of the company’s core business.

• Alcon generated second-quarter revenue of $2.78 billion, up 8% year-over-year and slightly above the consensus estimate of approximately $2.77 billion.
• The company raised its 2026 adjusted EPS guidance to $3.44–$3.53, compared with analysts’ expectations of $3.41, while also increasing its full-year operating margin outlook.
• Full-year sales guidance was widened to $10.835–$11.041 billion, compared with a consensus estimate of approximately $11.087 billion, meaning the midpoint of the range remains below market expectations.
• Reported EPS fell to $0.00 from $0.35 a year earlier, although the figure was affected by a one-off, non-cash after-tax charge of approximately $287 million related to the discontinuation of intraocular lens programs acquired from PowerVision.
• Investors focused on the performance of Alcon’s underlying business and the improved guidance, treating the PowerVision impairment as a one-off event that does not reflect the current health of the Surgical and Vision Care segments.

Alcon share price chart (D1 timeframe, ALC.CH)

Source: xStation5