European equities opened the week on a cautious note on Monday, as investors weighed escalating unrest in Iran alongside renewed political pressure on Jerome Powell. Market sentiment remained fragile amid rising geopolitical and policy-related uncertainty.
By 03:05 ET (08:05 GMT), Germany’s DAX was broadly flat, while France’s CAC 40 slipped 0.2% and the UK’s FTSE 100 also declined 0.2%.
Iran unrest dominates investor focus
Attention across European markets this week is firmly on Iran, where civil unrest has intensified. A rights group reported that more than 500 people have been killed following a violent crackdown on widespread anti-government protests.
U.S. President Donald Trump said on Sunday that his administration is considering a range of strong responses, including military options, warning Iran’s leadership that the United States would act if security forces continue to fire on protesters. Trump also said Iran had reached out to discuss its nuclear program, which was targeted by Israeli and U.S. strikes in June, and noted that talks with Iranian officials remain possible.
Powell investigation weighs on risk sentiment
Investor caution was reinforced by news that the U.S. Department of Justice has opened a criminal investigation into Powell related to congressional testimony he gave last summer concerning a Federal Reserve building renovation.
Responding to the development, Powell said the issue goes to the heart of whether the Fed can continue setting interest rates based on economic data, rather than political pressure or intimidation. Markets are weighing the longer-term implications for the central bank’s independence, even as some investors speculate the situation could eventually pave the way for lower interest rates later this year, particularly once Powell’s term ends in May and a new Fed chair takes office.
Capgemini downgraded by Morgan Stanley
With no major European economic data or earnings releases scheduled for Monday, individual stocks drew attention. Capgemini came into focus after Morgan Stanley downgraded the French IT services group to “underweight” from “equal-weight.”
In a note dated Monday, the U.S. bank cited limited upside to valuation and reduced visibility on a sustained acceleration in growth as reasons for the downgrade.
Oil prices consolidate after recent gains
Crude oil prices steadied on Monday following last week’s rally, as ongoing unrest in Iran — a key Middle East oil producer — raised concerns over potential supply disruptions.
Brent crude futures slipped 0.3% to $63.22 a barrel, while U.S. West Texas Intermediate crude edged 0.1% higher to $58.98 a barrel. Both benchmarks gained more than 3% last week as protests intensified, marking the largest demonstrations against Iran’s clerical leadership since 2022 and heightening fears of a broader regional confrontation in a critical energy-producing area.
