London’s stock market closed mixed on August 26. Healthcare and oil stocks were sold while consumer staples and tobacco shares attracted buyers, with the FTSE 100 (.L) posting its first modest decline in seven sessions. The mid-cap FTSE 250 index rose 0.17%.

The US Commerce Department reported that the July Personal Consumption Expenditures (PCE) price index rose 3.7% year-over-year, exceeding market expectations of 3.6%, modestly strengthening the case for a Federal Reserve rate hike in September. This weighed on European markets overall.

A senior Iranian official disclosed that negotiations between Iran and Oman over the Strait of Hormuz remain ongoing. The FTSE 350 oil & gas index fell 0.67%, while the healthcare index dropped 1.12%. Amid growing caution over AI-related investments and heightened attention on Nvidia’s (NVDA) upcoming earnings, accounting software firm Sage Group fell 3.8%, information analytics company Relx declined 1.2%, and credit information services provider Experian dropped 1.4%.

On the upside, consumer goods giant Unilever rose 0.2%. Tobacco companies Imperial Brands gained 1.5% and British American Tobacco climbed 2.5%. Precious metals miner Hochschild Mining surged 5.4% after reporting first-half 2026 revenue up 62% year-over-year.

European Markets Slightly Lower Overall; Banks Firm

The STOXX Europe 600 closed 0.07% lower at 656.41. Markets lacked direction as investors weighed developments in Iran and US monetary policy. The Euro STOXX 50 rose 0.23% to 6,470.74, Germany’s Xetra DAX added 0.08% to 26,285.96, and France’s CAC 40 gained 0.27% to 8,462.39.

The STOXX Europe 600 healthcare index fell 1.00%. Ahead of Nvidia’s earnings, the technology index dropped 0.84%, with German software giant SAP sliding 2.9% after UBS downgraded the stock.

Banking stocks were bid, with the STOXX eurozone bank index up 0.97%. Deutsche Bank rose 4.3% and Commerzbank gained 2.8%. According to sources, German Finance Minister Klingbeil is expected to meet with UniCredit’s top executive regarding the Italian banking giant’s potential acquisition of Commerzbank.

Eurozone Bond Yields Edge Higher

Eurozone government bond yields rose modestly, reacting to US inflation data that came in slightly above expectations. The German 10-year Bund yield rose 2 basis points to 3.240%, after falling 5 bps the previous day. The German 30-year yield added 1 bp to 3.747%. Both yields had hit 15-year highs last week.

Markets continue to monitor the possibility of an agreement on reopening the Strait of Hormuz. A senior Iranian source said on August 26 that Iran and Oman are still negotiating the details of an agreement regarding the strait. This followed an earlier announcement by Iran’s Islamic Revolutionary Guard Corps (IRGC) that the two countries had reached a deal on control rights and revenue sharing for the waterway.

Brent Crude futures fell for a third consecutive session, trading 1% lower at $87.80 per barrel on August 26. Easing concerns over military escalation, as the US signaled a preference for prioritizing economic sanctions on Iran, contributed to the decline.

ING commodity strategists noted in a report that any agreement over the Strait of Hormuz would not restore crude oil transit volumes through the strait to previous levels. “For signs of normalization to emerge, the US would need to lift its port blockade on Iran and ease sanctions against the country,” they said.

Currency and Commodity Markets

In foreign exchange markets, the euro traded at $1.1650, the dollar at 159.35 yen, and the euro at 185.66 yen in late European trading. The dollar saw modest buying compared with late Asian market levels.

The afternoon gold fix was $4,631.50. Despite elevated US long-term interest rates, uncertainty over the Middle East situation underpinned demand for gold as a safe-haven asset.

Major IndexCloseChange% ChangeSTOXX Europe 600656.41-0.07-0.01%FTSE Eurofirst 3002,621.97-1.25-0.05%Euro STOXX 506,470.74+15.11+0.23%FTSE 10010,878.12-8.04-0.07%Xetra DAX26,285.96+19.82+0.08%CAC 408,462.39+23.19+0.27%

Note: Closing prices and changes based on published European market summary data

Market attention is shifting to the Jackson Hole symposium, which runs from August 27 to 29. Fed Chair Warsh is scheduled to speak on August 28, which will provide important clues for September monetary policy. In Europe, the ECB is set to release minutes from its July meeting on August 27. According to ECB officials who spoke to Reuters, the central bank is prepared to raise rates at its next meeting in September but is reluctant to signal additional hikes beyond that.