European Stocks Poised for Lower Open to Begin 2026

European stocks closed sharply lower for a second session on Friday as fresh strikes between Iran and the US added to risks of energy shortages for major European importers. The Eurozone's STOXX 50 fell 1.1% to 5,905 and the pan-European STOXX 600 dropped 0.8% to 612. Tankers and military vessels were reportedly hit during the day to dim expectations that the US and Iranian delegations were closer to agreeing on an end to the war, driving markets to reconsider the positions taken during Wednesday when the consensus saw more optimism in the conflict's end. Risk-sensitive consumer cyclical stocks closed lower, with Hermes, Adidas, and Inditex dropping more than 2.5%. Meanwhile, Safran fell 3% for another session of sharp selling, and Rheinmetall sank 10% as investors continued to assess the company's earnings report from yesterday. Meanwhile, Intesa Sanpaolo dropped 2% after posting its earnings report.

Stocks in Europe moved lower on Friday, with the STOXX 50 falling 1.1% and the STOXX 600 down 0.8%, extending losses from the previous session. Investor sentiment weakened after US President Trump threatened to impose “much higher” tariffs on the European Union by July 4 if the bloc fails to reduce its tariffs on US goods to 0. The warning followed a call with European Commission President von der Leyen, who nevertheless said the EU was making “good progress” toward lowering tariffs ahead of the deadline. Escalating tensions in the Middle East also weighed on markets after the US launched strikes on Iranian military targets following attacks on three Navy destroyers in the Strait of Hormuz. Meanwhile, earnings season remained in focus. IAG fell around 3% after lowering its annual profit outlook due to rising jet fuel costs, while Intesa Sanpaolo slipped 1.1% ahead of its quarterly results. Despite Friday’s decline, the STOXX 50 ended the week up 1.5%, while the STOXX 600 gained 0.8%.

European equity markets were set for a weaker open on Friday, extending the previous session’s losses as renewed clashes between the US and Iran in the Strait of Hormuz reignited geopolitical concerns. Three US Navy destroyers transiting the strategic waterway reportedly intercepted Iranian attacks and carried out retaliatory strikes, although President Donald Trump said the ceasefire remains in effect. In Europe, investors will monitor German trade data and UK house price figures for further economic signals. On the corporate front, earnings reports are due from Intesa Sanpaolo, Enel, and International Airlines Group, among others. In premarket trading, futures tied to the Euro Stoxx 50 and Stoxx 600 were both down around 0.6%.