European equity markets opened the week on a cautious footing on Monday, with investors monitoring escalating unrest in Iran alongside renewed political scrutiny of U.S. Federal Reserve chair Jerome Powell.
At around 08:05 GMT, Germany’s DAX was broadly flat, while France’s CAC 40 edged 0.2% lower and the UK’s FTSE 100 slipped 0.2%.
Rising Civil Unrest in Iran
Investor focus this week is firmly on Iran, where civil unrest has intensified. According to a human rights organisation, more than 500 people have been killed after widespread protests were met with a violent response from Iranian authorities.
U.S. President Donald Trump said on Sunday that he was considering a range of strong responses, including military options, warning Iran’s leadership that the United States would strike if security forces opened fire on demonstrators. Trump also said Iran had reached out to discuss its nuclear programme, which was targeted by Israeli and U.S. strikes in June, and noted that talks with Iranian officials could take place.
Powell Investigation Adds to Market Unease
Risk sentiment was further dampened by news that the U.S. Department of Justice has opened a criminal investigation into Jerome Powell, relating to congressional testimony he gave last summer about a Federal Reserve building renovation project.
Responding to the development, Powell said: “This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions – or whether instead monetary policy will be directed by political pressure or intimidation.”
The investigation raises questions about the long-term independence of the Federal Reserve, although it could also increase the likelihood of lower interest rates later this year, particularly once a new Fed chair takes office after Powell’s term ends in May.
Capgemini Cut by Morgan Stanley
With little major economic data or earnings due in Europe on Monday, attention is likely to fall on Capgemini (EU:CAP) after Morgan Stanley downgraded the French IT services group.
The U.S. investment bank cut its rating on Capgemini to “underweight” from “equal-weight,” citing limited upside to valuation and a lack of visibility on a sustained acceleration in growth, according to a note published on Monday.
Oil Prices Steady After Recent Gains
Oil prices consolidated following last week’s rally, as ongoing unrest in Iran — a major Middle Eastern oil producer — continued to raise concerns over potential supply disruptions.
Brent crude futures eased 0.3% to $63.22 a barrel, while U.S. West Texas Intermediate crude edged 0.1% higher to $58.98 a barrel. Both benchmarks gained more than 3% last week as protests intensified, marking the largest demonstrations against Iran’s clerical establishment since 2022.
The situation has heightened fears of a wider regional conflict in one of the world’s most critical energy-producing regions.
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