European Stocks Edge Lower

European stocks closed lower for a third session on Monday amid continued pressure from the war in the Middle East and its impact on lower energy supply. The Eurozone's STOXX 50 fell 0.3% to 5,895 and the pan-European STOXX 600 was flat at 612. US President Trump stated that the US rejected Iran's counteroffer of concessions to end their war over the weekend, escalating the hawkish rhetoric and prolonging the suspension of energy exports from the key region. Risk-sensitive companies within the consumer discretionary sector led the losses, dragging luxury brands traded in Paris. LVMH fell over 4%, while Hermes and L'Oreal dropped around 3%. In turn, Schneider Electric added 2.3% after its recent pressure this month, and Siemens gained 1.4% ahead of its earnings result this week.

Both the STOXX 50 and the STOXX 600 fluctuated around the flatline on Monday, starting the week on a cautious note as tensions in the Middle East persisted, with no signs of a swift resolution to the conflict. US President Trump rejected Iran’s counterproposal aimed at ending the 10-week conflict, calling it “totally unacceptable,” while Tehran vowed to “never bow”. As a result, oil prices moved higher, fueling concerns over the economic impact of a prolonged oil shock. Defense stocks came under pressure, with shares of Rheinmetall falling 3.6% and Leonardo down 3.8%. Luxury names also traded in negative territory, including LVMH (-1.3%), L'Oréal (-1.1%), and Hermès (-1.9%). On the other hand, shares of Novo Nordisk surged nearly 5%, while energy stocks advanced alongside higher oil prices, with Shell gaining 0.6% and TotalEnergies up 0.9%.

European equity markets were set for a muted open on Monday as the US and Iran continued to struggle toward a diplomatic resolution to the 10-week conflict. President Donald Trump dismissed Iran’s response to his peace proposal as “TOTALLY UNACCEPTABLE,” while Tehran reportedly demanded an end to military operations on all fronts as well as the removal of sanctions. Israeli Prime Minister Benjamin Netanyahu also stated that the conflict is not over, emphasizing that the US and Israel remain committed to limiting Iran’s nuclear ambitions. Meanwhile, investors had little economic or corporate news from Europe to drive sentiment, with no major data releases or earnings reports scheduled for Monday. In premarket trading, futures linked to the Euro Stoxx 50 and Stoxx Europe 600 were broadly flat to slightly higher.