European stock markets slipped at the start of the week as fresh confusion over U.S. tariff policy chipped away at risk appetite among investors. At 03:02 ET (08:02 GMT) on Monday, the DAX in Germany was down 0.6%, France's CAC 40 had lost 0.2% and the U.K.'s FTSE 100 was 0.1% lower.
The immediate trigger for the softer tone was renewed uncertainty stemming from developments in U.S. trade policy. Markets had received a lift late on Friday when the U.S. Supreme Court struck down most of the tariffs that the U.S. president imposed last year, concluding that the emergency statute relied on did not permit such duties. Over the weekend, however, the administration announced a different approach - first a 10% global levy and then raising it to 15% - that could remain in place for up to five months while officials look for longer-term workarounds.
That sequence of events - a court decision followed by a rapid policy response using a different statute - has created a level of unpredictability that market participants said was weighing on sentiment.
"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 on CBS's "Face the Nation" on Sunday. "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 in European markets had been improving. The STOXX 600 rallied to an all-time high last week as generally positive corporate earnings and a stream of data signaled a gradual regional recovery. A set of flash indicators released on Friday showed Eurozone business activity accelerated more quickly than expected, with manufacturing returning to growth territory 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, commenting on the PMI readings.
Attention in Europe will also be on Germany's Ifo business climate survey, due later in the session, which is projected to show continued improvement in sentiment for the Eurozone's largest economy.
Corporate results and operational updates are plentiful this week. In Europe, heavyweight names reporting include HSBC, Deutsche Telekom, Iberdrola and Schneider Electric. Across the Atlantic, semiconductor heavyweight Nvidia (NASDAQ:NVDA) is scheduled to report on Wednesday, a major data point for the broader market.
Among company-specific developments on Monday, Dutch postal operator PostNL announced a 43% cut to its annual dividend and cautioned that free cash flow could turn negative again in 2026. The company posted full-year free cash flow of a loss of 25 million, compared with a profit of 12 million in the prior year, even as revenue rose 2.2% to 3.32 billion.
Spanish dermatology group Almirall said its eczema biologic Ebglyss tripled sales in its second year on the European market, helping push the company past 1 billion in annual revenue for the first time.
In the aerospace sector, Rolls-Royce is reportedly pressing the British government for taxpayer support to help fund a 3 billion development of a new aircraft engine as the company looks to re-enter the short-haul market, a report said earlier on Monday.
Commodity markets were also responsive to the shifting risk backdrop. Oil prices fell sharply on Monday, surrendering some of the gains seen last week. Brent futures declined 1.3% to $70.39 a barrel, while U.S. West Texas Intermediate futures dropped 1.4% to $65.55 a barrel.
Both contracts had climbed almost 6% in the prior week as concerns about a possible U.S.-Iran confrontation and a larger-than-expected decline in U.S. crude inventories supported prices. Those geopolitical tensions may have eased somewhat as the two countries are expected to hold a third round of nuclear talks on Thursday in Geneva, raising the prospect of a diplomatic path that could reduce the risk of supply disruption from the Middle East.
The article notes Iran's role as a significant producer within the Organization of the Petroleum Exporting Countries and its possession of some of the world's largest proven crude reserves.
Market participants enter the week balancing that evolving policy uncertainty in trade with early signs of a Eurozone recovery and a full schedule of earnings and economic releases. The interplay of policy moves, corporate results and commodity price swings will likely continue to shape sentiment in European markets in the days ahead.