European Stocks Close Lower

European stocks trimmed earlier losses but still closed in the red on Monday as the escalating conflict between Iran and the US prolonged concerns of tight energy supply from the Middle East. The Eurozone's STOXX 50 dropped 0.4% to 5,904 and the pan-European STOXX inched down 0.2% to 614. US President Trump stated that the US would impose a blockade on the Strait of Hormuz, adding to the conflict following unsuccessful talks between Tehran and Washington. Meanwhile, markets were also digesting political developments in Hungary, where Peter Magyar won the election and is set to become the next prime minister, ending Prime Minister Orban's Eurosceptic 16-year tenure. Banks pulled back as yields rose, with Societe Generale, Santander, and BNP Paribas dropping close to 1%. Meanwhile, LVMH dropped 0.4% ahead of its first quarter revenue posting after the bell.

European stocks began the week on a negative note, with the STOXX 50 and STOXX 600 both declining nearly 0.9%. Investor sentiment weakened as hopes for a ceasefire in Iran faded following unsuccessful talks between Tehran and Washington. Adding to tensions, US President Trump stated that the US would impose a blockade on the Strait of Hormuz. Meanwhile, markets were also digesting political developments in Hungary, where Peter Magyar won the election and is set to become the next prime minister, ending Viktor Orban’s 16-year tenure. Magyar has pledged to strengthen ties with the European Union. Investors are also turning their attention to the start of the earnings season, with major companies such as LVMH, BMW, Kering, ASML, and Hermes scheduled to report results this week. All sectors were in the red, with consumer cyclicals, technology, financials, and industrials among the worst-performing.

European equity markets were poised to open sharply lower on Monday after President Donald Trump announced plans to blockade the Strait of Hormuz following the failure of US-Iran negotiations in Islamabad over the weekend, raising the risk of a deeper global energy crisis. Trump is also reportedly weighing renewed strikes on Iran. Talks in Pakistan ended without an agreement as the US accused Iran of refusing to abandon its nuclear ambitions, while Tehran reportedly demanded control of the Strait of Hormuz, war reparations, a regional ceasefire, and access to frozen overseas assets. In Europe, investors will look to Turkish retail sales and Russian trade data, along with earnings from French luxury group LVMH. In premarket trading, Euro Stoxx 50 and Stoxx 600 futures were down 1.5% and 1.2%, respectively.