European equity markets moved modestly lower on Monday as renewed uncertainty surrounding U.S. trade tariffs weakened investor risk appetite at the start of the week.
At 08:02 GMT, Germany’s DAX fell 0.6%, France’s CAC 40 declined 0.2% and the UK’s FTSE 100 slipped 0.1%.
Tariff uncertainty weighs on sentiment
Global markets, including Europe’s main indices, had rallied late last week after the U.S. Supreme Court struck down most of the tariffs introduced by President Donald Trump last year, ruling that the emergency legislation used did not grant authority to impose them.
Over the weekend, however, Trump announced new global tariffs under a different legal framework, initially proposing a 10% levy before raising it to 15%. The measures could remain in place for up to five months while the administration works toward a longer-term solution.
The perception that trade policy decisions are shifting rapidly has unsettled investors.
“If it shakes the whole equilibrium which people in trade have got used to…it is going to bring about disruptions,” European Central Bank President Christine Lagarde said Sunday on CBS’s “Face the Nation”. “You want to know the rules of the road before you get in the car. It’s the same with trade. It’s the same with investment.”
Confidence indicators remain supportive
Despite the cautious start to the week, European sentiment had been improving recently, helping lift the pan-European STOXX 600 index to a record high last week. Stronger-than-expected corporate earnings and economic indicators pointing toward gradual regional recovery supported the advance.
Figures released Friday showed eurozone business activity expanded faster than expected this month, with manufacturing returning to growth for the first time since October.
“It might be premature, but this could be the turning point for the manufacturing sector as the headline PMI increased to growth territory,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
Germany’s Ifo business climate survey, due later Monday, is expected to show a further improvement in confidence within Europe’s largest economy.
Earnings focus turns to Nvidia and European corporates
Investors are also preparing for a busy earnings week. European companies set to report include HSBC (LSE:HSBA), Deutsche Telekom (TG:DTE), Iberdrola (BIT:1IBE) and Schneider Electric (EU:SU). However, the most closely watched release will come from U.S. chipmaker Nvidia (NASDAQ:NVDA), scheduled to publish results on Wednesday.
Among company updates, PostNL (EU:PNL) reduced its annual dividend by 43% and warned that free cash flow could turn negative again in 2026 after reporting a €25 million free cash flow loss for the year, compared with a €12 million surplus previously, despite a 2.2% rise in revenue to €3.32 billion.
Meanwhile, Barcelona-based dermatology specialist Almirall (USOTC:LBTSF) said sales of its eczema biologic Ebglyss tripled during its second year in the European market, helping push annual revenue beyond €1 billion for the first time.
Separately, Rolls-Royce (LSE:RR.) is reportedly seeking UK government financial backing for the £3 billion development of a new aircraft engine as it looks to re-enter the short-haul aviation market, according to a Financial Times report published Monday.
Oil prices retreat ahead of nuclear talks
Oil prices declined sharply on Monday, reversing part of last week’s gains as markets assessed the prospect of renewed U.S.-Iran nuclear negotiations alongside ongoing trade uncertainty.
Brent crude futures fell 1.3% to $70.39 per barrel, while U.S. West Texas Intermediate futures dropped 1.4% to $65.55 per barrel.
Both benchmarks had climbed nearly 6% last week amid concerns over a potential U.S.-Iran confrontation and an unexpected drawdown in U.S. crude inventories.
A third round of nuclear talks between the United States and Iran is expected to take place Thursday in Geneva, raising hopes of a diplomatic outcome that could ease concerns about disruptions to Middle Eastern oil supplies.
Iran remains a key producer within the Organization of the Petroleum Exporting Countries (OPEC) and holds some of the world’s largest proven crude oil reserves.
