European equities started the week on a cautious note, with investors carefully digesting a fresh wave of corporate earnings and the latest developments in high-stakes trade negotiations between the U.S. and the European Union.
By 08:06 GMT on Monday, the Stoxx 600 index hovered near the flatline, mirroring muted moves in Germany’s DAX. France’s CAC 40 edged 0.2% lower, slipping by 16 points, while London’s FTSE 100 posted a modest 0.1% gain, rising 12 points.
Mixed Corporate Earnings Shape Market Mood
Investors were weighing a mix of earnings reports, including upbeat results from low-cost airline Ryanair (LSE:0RYA). The carrier more than doubled its net profit in the April–June period, benefiting from higher last-minute fares and the timing of the Easter holiday. Ryanair also noted solid booking momentum for the peak summer travel season.
In contrast, shares in Stellantis (BIT:STLAM) came under pressure after the carmaker warned of a projected €2.3 billion net loss for the first half of 2025. The news sent its Milan-listed shares lower in early trading.
Tense Trade Talks with Washington Under Scrutiny
Beyond earnings, market attention remained fixed on sensitive trade talks between Brussels and Washington, as both sides attempt to avert a tariff standoff.
U.S. Commerce Secretary Howard Lutnick expressed optimism over reaching a deal before President Trump’s proposed “reciprocal” tariffs take effect on August 1. However, significant uncertainty remains.
While EU negotiators have pushed for the U.S. to stick with a 10% baseline tariff, reports suggest Washington may seek a tougher deal, possibly pushing the rate to 15% or higher. According to the Wall Street Journal, the U.S. also wants additional concessions from Europe.
In response to rising pressure, Germany—Europe’s leading exporter—has shifted to a more confrontational tone, aligning with France in support of a tougher EU stance. Officials are reportedly considering further retaliatory measures against U.S. companies beyond those already on the table.
Meanwhile, EU leaders including Commission President Ursula von der Leyen and Council President Antonio Costa are expected to meet with Chinese President Xi Jinping later this week, adding another layer of complexity to the bloc’s global trade strategy.
Eyes on the ECB
Markets are also preparing for the European Central Bank’s upcoming policy announcement on July 24. Economists broadly expect the ECB to keep its deposit rate steady at 2% following last month’s 25-basis-point cut.
That June move marked the eighth rate reduction in 12 months, but policymakers signaled a pause for July amid ongoing trade uncertainty and lingering inflation risks.
“The ECB’s policy path is likely to remain highly dependent on how trade tensions evolve and how they affect the eurozone’s economic outlook,” analysts at Erste Group wrote in a research note.
Oil Drifts Lower on Demand Concerns
Crude prices eased on Monday amid concerns that escalating trade tensions could dampen global demand. European sanctions on Russian energy flows also added to market jitters.
By 04:23 ET, Brent crude futures were down 0.3% at $69.08 per barrel, while WTI futures also slipped 0.3% to $65.89.
The latest EU sanctions targeting Russia’s energy sector include measures against India’s Nayara Energy, which has been refining Russian crude. ING analysts noted that traders seemed skeptical about the impact of the sanctions, though they flagged a potentially significant clause: a ban on imports of oil products made from Russian crude in third-party countries.
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