European stocks began the new week quietly on Monday, as investors cautiously watched the growing unrest in Iran as well as renewed political pressure on Federal Reserve Chairman Jerome Powell.
At 11:05 AM Saudi time, Germany’s DAX index was virtually unchanged, while France’s CAC 40 index fell by 0.2% and the UK’s FTSE 100 index declined by 0.2%.
Increasing civil unrest in Iran
European investors are focusing this week on civil unrest in Iran, where more than 500 people have been killed, according to a rights group, after widespread protests were met with a violent crackdown by Iranian authorities.
US President Donald Trump said on Sunday that he was considering a range of strong responses, including military options, to the escalating unrest, warning Iran's leaders that the United States would attack if security forces opened fire on protesters.
Trump added that Iran had called for negotiations over its nuclear program, which was bombed by Israel and the United States in June, and indicated that the United States might meet with Iranian officials.
Powell is under investigation
Risk sentiment was also affected by news that the U.S. Justice Department had opened a criminal investigation into Federal Reserve Chairman Powell over testimony he gave to Congress last summer about the Federal Reserve building renovation project.
In response to the news, Powell said: “It’s a question of whether the Federal Reserve will be able to continue setting interest rates based on evidence and economic conditions — or whether monetary policy will instead be guided by political pressure or intimidation.”
Such a move could have long-term implications for the independence of the Federal Reserve, but it could also lead to lower interest rates this year, especially after the new Federal Reserve chairman takes office after May when Powell’s term ends.
Capgemini's rating downgraded
There are no major earnings or economic data releases on Monday in Europe, but Capgemini (EPA:CAPP) is likely to be in the spotlight after Morgan Stanley downgraded its position on the French IT firm.
US brokerage firm Capgemini downgraded its rating to underweight from equal weight, citing limited upside potential and limited visibility for sustained growth acceleration, in a note dated Monday.
Crude oil prices stabilize following Iranian protests
Oil prices stabilized on Monday after recent gains as ongoing civil unrest in Iran, a major Middle Eastern producer, threatened to disrupt global supplies.
Brent crude futures fell 0.3% to $63.22 a barrel, while U.S. West Texas Intermediate crude futures rose 0.1% to $58.98 a barrel.
Both benchmark contracts gained more than 3% last week as widespread anti-government protests escalated, leading to the largest demonstrations against the country's religious establishment since 2022.
This has exacerbated fears of a wider regional confrontation in this major energy-producing region.
