European Stocks Set for Subdued Open

European stocks traded higher on Tuesday, with the STOXX 600 rising 0.5% and the STOXX 50 gaining 0.2%, following a subdued session the previous day, as developments in the Middle East continued to dominate headlines. Oil prices retreated amid reports of renewed mediation efforts between the US and Iran, despite fresh attacks in the region. Investors are also closely monitoring the latest corporate earnings while awaiting the ECB's monetary policy decision later this week. Tech, energy and mining shares outperformed. ASML Holding (2.4%), TotalEnergies (1.6%), ABB (1%), Schneider Electric (1.1%), and Siemens Energy (1.2%) traded higher. Also, Novartis added 1.5% after the reporting soft earnings but higher sales in Q2.

European equity markets were set to open slightly lower on Tuesday as investors continued to monitor ongoing hostilities between the US and Iran, which entered a tenth consecutive day. However, mediators were working to bring both sides back to the negotiating table, while reports pointed to a possible 10-day ceasefire. In Europe, investors will focus on UK unemployment figures and economic sentiment data from Germany and the Eurozone, while looking ahead to an expected interest rate hold from the European Central Bank later this week. Meanwhile, there are no major corporate earnings releases scheduled in Europe on Tuesday. In premarket trading, Euro Stoxx 50 and Stoxx 600 futures were down 0.1% and 0.2%, respectively.

European stock indices closed muted on Monday, holding the losses from last week amid a deteriorating macroeconomic backdrop ahead of major earnings results to be reported this week. The Euro STOXX 50 closed flat at 6,228 and the STOXX Europe 600 dropped 0.3% to 639.9. European natural gas prices extended their surge after escalated attacks by US and Iran halted LNG tanker flows through the Strait of Hormuz, raising inflationary risks in the Eurozone. The ECB is still expected to hold rates unchanged this week, but markets piled on bets of another rate hike this year. Banks were mixed ahead of a big week of earnings for the sector, with Santander edging lower, while UniCredit and BNP Paribas added 0.5% and 1.1%. Meanwhile, LVMH lost more than 1.3% as higher yields across the globe dented the outlook for discretionary spending. Meanwhile, Ryanair tanked 5.2% as higher fuel costs bit into second quarter earnings.