European stocks start August near records — will the ‘August weakness’ return?
Indexes are near record highs but thin summer liquidity and recent geopolitical risks keep August on investors’ watch list.
European stock markets opened August 2026 on the front foot, defying a long‑running seasonal pattern. Major benchmarks — EURO STOXX 50, DAX and CAC 40 — are trading close to record highs and, so far, investors do not appear overly worried about the so‑called “August weakness.”
Historically, August has tended to be a soft month for European equities: the DAX posts an average August return of -1.03% since 1970, while the CAC 40, observed since 1988, shows an average August return of -1.22%.
Those averages, however, are influenced by a handful of very bad years. In August 1998 the market fell 14.44% amid the Russian debt crisis. A year earlier, the Asian financial crisis produced a drop of nearly 10%. In 2011 the eurozone debt crisis triggered a 13.79% decline. Similar shocks hit markets in 1990 after Iraq’s invasion of Kuwait and in 2015 following China’s yuan devaluation, which sparked a global sell‑off.
When extremes are removed, the picture changes
If those five extreme years are excluded from the calculation, the average August return for the EURO STOXX 50 shifts from -1.42% to +0.17% — showing how a few outliers can change the long‑term statistics.
Still, several structural risks make August potentially vulnerable. Liquidity tends to thin as many European traders and investors take summer holidays, increasing market sensitivity to unexpected economic or geopolitical shocks. Attention will also turn to the Jackson Hole conference toward the end of the month, where signals about future U.S. interest‑rate policy are closely watched. At the same time, many European companies enter August with relatively strong earnings expectations, a factor that has helped keep indices near record levels.
Rising energy prices — especially if tensions in the Middle East escalate — could push inflation higher and squeeze corporate profits. Historical averages do not guarantee a drop in August, but when markets sit at record highs while liquidity is reduced, a single surprise can trigger a much larger move than under normal conditions. The investor who predicted the 2008 crisis now warns of a new "market bubble".
Photo: press material from the event
