European equities came under pressure Wednesday as Brent crude oil broke above $100 a barrel, with the DAX dropping 1.66% to 25,576.45 points — falling back to levels last seen at the end of July. Trading volumes were elevated. The MDax of mid-cap stocks shed 1.43% to 32,078.48.
The Brent benchmark climbed past $100, while refined products such as diesel advanced even more sharply as the Middle East conflict expanded toward the Red Sea near Saudi Arabia. European natural gas prices rose for a fourth consecutive session.
Investors are pricing in prolonged higher energy costs amid fears of further disruptions to oil production and transport, wrote Deutsche Bank strategist Jim Reid. "Skepticism is growing that oil prices will fall significantly over the coming months."
Market participants also held back on buying stocks ahead of the European Central Bank's rate decision on Thursday, where a second increase this year is expected. Higher rates make equities less attractive relative to fixed-income securities.
Among individual names, Deutsche Börse fell 2.3% after placing a convertible bond to fund general corporate purposes and liabilities. Analyst Tom Sykes at Deutsche Bank recommended selling Beiersdorf, noting that European consumer goods companies are trading at their lowest valuation relative to the broader market in 18 years, though he acknowledged recurring calls for mean reversion face headwinds as consumer wallets lag economic growth.
In a rare bright spot, RWE rose 1.7%, buoyed by news of a power-purchase agreement between Google and Finnish utility Fortum. Analyst Ahmed Farman at Jefferies called the deal a positive signal for EU energy companies, citing growing data-center demand tied to artificial intelligence — a tailwind RWE has previously flagged.
At the other end, Auto1 plummeted 6.5% in the MDax after Chief Financial Officer Christian Wallentin resigned for family reasons. Co-founder and CEO Christian Bertermann will oversee finance until a successor is found.
Wider European indices followed suit: the EuroStoxx 50 fell 1.58% to 6,311.56. Britain's FTSE 100 and Switzerland's SMI also closed weaker, while the Dow Jones gave up nearly 1% by the European session close.
