European markets were poised to open lower at the start of the week, with Stoxx 50 futures expected to fall 0.32%, France's CAC 40 down almost 0.1%, Germany's DAX slipping 0.27%, and Italy's FTSE MIB declining 0.31% [1]. The U.K.'s FTSE 100 remained closed for a bank holiday [1]. The negative sentiment was driven by renewed Middle East tensions and the threat of new U.S. tariffs on European autos. President Donald Trump announced on Friday his intention to raise tariffs on cars and trucks from the European Union to 25%, causing European automakers to trade between 1.2% and 2.2% lower in pre-market activity [1]. The European Commission stated it was considering its response, and this threat comes despite a Supreme Court ruling in February that struck down large parts of Trump's tariff agenda [1].
In the Middle East, Trump unveiled 'Project Freedom' on Sunday, an initiative aimed at freeing ships stranded in the Strait of Hormuz, potentially involving 15,000 troops, guided missile destroyers, and 100 aircraft to escort commercial vessels [1][2]. The United Kingdom Maritime Trade Operations reported that a vessel was struck by projectiles near Fujairah in the United Arab Emirates early Monday [1]. Despite these developments, oil prices edged lower, with Brent crude down 0.8% to $107.38 per barrel and West Texas Intermediate slipping 0.84% to $101.10 according to [1], while [2] reports Brent crude for July delivery fell 0.60% to $107.49 and WTI for June dropped 0.86% to $101.07, indicating minor discrepancies in price and contract months.
Market reaction to the geopolitical news was muted, with investors appearing to have priced in ongoing Gulf tensions after weeks of volatility [2]. Instead, attention shifted to a busy week of corporate earnings, with companies like Pandora, Shell, Maersk, Novo Nordisk, Ferrari, BMW, Unicredit, and HSBC set to report results [1][2]. Analysts noted that guidance on energy costs, consumer demand, and the outlook for the second half of the year would be closely watched, especially for firms exposed to energy and shipping disruptions [2].
Elsewhere, South Korea's Kospi reached a new all-time high, supported by strong technology and export sectors, while other Asia-Pacific indexes were mostly higher [2]. Germany's DAX slipped at the open after its best month since January of the previous year, and pre-market indicators suggested a mixed start for European and U.S. markets [2].
In other corporate news, Spirit Airlines ceased operations after failing to secure a rescue deal, and GameStop made a bid to acquire eBay [2]. Trump also repealed tariffs on Scotch whisky from the U.K. last week [2].
CONCLUSION
European markets opened lower amid renewed trade tensions and Middle East uncertainty, with Trump's tariff threats weighing on automakers and 'Project Freedom' having limited impact on oil prices. Investors appear to be shifting focus to upcoming corporate earnings, which are expected to be the main driver of market movement in the near term.