European Markets Head for Lower Open

European stocks started the week on a cautious note, with both the STOXX 50 and the STOXX 600 falling 0.2% as oil prices climbed following renewed military strikes involving the US and Iran. Tehran claimed it has closed the Strait of Hormuz while US President Trump insisted the strait was open to commercial traffic. Traders are also bracing for the earnings season to kick off. The technology sector came under pressure after South Korea's SK Hynix plunged 15% in Seoul, its largest one-day decline on record, as investors locked in profits following a 13% surge in its US-listed American depositary receipts during their trading debut on Friday, while also reassessing the outlook for AI-driven demand. Among European tech names, ASML Holding (-2%) and Infineon Technologies (-3%) were among the session's weakest performers. In contrast, the energy sector booked gains, including BP (2.6%), Eni (2.5%), TotalEnergies (1.9%) and Repsol (1.7%).

European equity markets were set to open sharply lower on Monday as surging oil prices following renewed hostilities between the US and Iran reignited concerns over inflation and the outlook for interest rates. The US carried out its fourth strike in a week against Iran on Sunday in retaliation for an Iranian attack on a Cyprus-flagged container ship. Tehran declared that the Strait of Hormuz would be closed "until further notice," though the claim was dismissed by the US Central Command. Investors are also preparing for key US inflation data and a wave of corporate earnings reports from Wall Street this week. Meanwhile, Europe has no major economic data or corporate earnings releases scheduled for Monday, with traders instead turning their attention to Eurozone and UK GDP figures due later this week. In premarket trading, Euro Stoxx 50 and Stoxx 600 futures were down 1% and 0.8%, respectively.

European stocks closed mixed on Friday, capping off a volatile week as more weakness in the tech sector matched with an uncertain macroeconomic outlook. The Euro STOXX 50 fell 0.3% to 6,267 and the STOXX Europe 600 closed flat at 641. Companies with exposure to the AI trade pared the sharp gains from yesterday as markets continued to gauge whether speculative demand on AI infrastructure will translate to sustainable returns. ASML dropped 2.1%, Siemens Energy fell 2.6%, and Infineon dropped 1.3%, even as the start of trading for SK Hynix in the US brought strong orders. In turn, banks closed higher on another strong session for Eurozone sovereign bonds after oil prices continued to trim gains from the week. BBVA, Deutsche Bank, and UniCredit gained around 1.5% each. The Euro STOXX 50 fell 2.3% and the STOXX Europe 600 fell 1.8% from their records last Friday.