Summary: European equities opened in negative territory as a sharp sell-off in precious metals weighed on sentiment at the start of a week packed with corporate earnings, central bank meetings and the release of economic indicators. Gold and silver extended steep losses from Friday, prompting margin adjustments on metals contracts, while oil prices fell after a reduction in perceived geopolitical risk. Several large banks reported results, and market attention will shift to a busy earnings calendar that includes US tech majors later in the week.
European markets traded lower on Monday morning, pressured by a rout in precious metals and a wider risk-off tone as investors prepared for a week heavy with earnings and policy decisions. At 03:05 ET (08:05 GMT), Germany's DAX was down 0.4%, France's CAC 40 slipped 0.5% and the U.K.'s FTSE 100 fell 0.6%.
Precious metals drive risk sentiment lower
Sentiment took a notable hit as both gold and silver extended a dramatic sell-off that began on Friday. Spot gold declined just under 6% to $4,597 per ounce on Monday, after crashing nearly 10% in Friday's session - a fall described as the steepest one-day drop in spot gold since 1983. Silver, which had rallied alongside gold amid safe-haven demand and speculative inflows, remained under pressure following Friday's 30% slump, its worst single-day performance since March 1980.
Compounding market unease, the nomination of Kevin Warsh as the next Federal Reserve chair corresponded with a sharp rise in the U.S. dollar, contributing to profit-taking in the metals complex and ending a rally that had pushed prices to record highs just days earlier. In addition, CME Group announced it was raising margins on several metals contracts effective from Monday's market close, a move that suggests some market participants may be struggling to meet margin calls and could be forced to liquidate liquid assets.
Corporate news - banks under the spotlight
The corporate calendar will be busy this week, with roughly 30% of the EuroSTOXX index by market capitalization scheduled to report results. Early in the session, Italian lender Intesa Sanpaolo reported a 7.6% rise in 2025 net profit to 9 9.3 billion and said it intends to return 9 8.8 billion to shareholders via dividends and buybacks, underscoring its status as one of Europe's more profitable banks.
Swiss wealth manager Julius Baer posted a 2025 net profit of CHF 764 million, a 25% decline from 2024, but slightly ahead of a consensus expectation of CHF 679 million. The mixed earnings picture among European lenders reflects divergent pressures across the sector.
Across the Atlantic, investor focus will shift to major US technology companies later in the week, notably Alphabet and Amazon. Market sentiment toward AI-linked stocks has cooled following Microsoft results that highlighted rising costs associated with substantial AI investment and raised questions about the timing of returns from those outlays.
Macro data and central bank watch
On the data front, German retail sales in December inched higher, rising 0.1% from the previous month, an improvement from November's 0.5% decline. Later in the session, eurozone manufacturing activity figures for January were expected to be released and were forecast to show a slight improvement from the prior month while remaining in contraction territory.
Saturday's data release showed China's official manufacturing PMI slipped further below the 50 threshold in January, signaling ongoing contraction in factory activity and persistent weakness in domestic demand.
Attention will also focus on central bank meetings this week, with both the European Central Bank and the Bank of England scheduled to set policy. Market expectations entering the meetings were that both institutions would hold interest rates unchanged.
Oil eases as geopolitical risk recedes
Oil prices retreated sharply on Monday as the perceived risk of a U.S. strike on Iran eased following comments from U.S. President Donald Trump that Tehran was "seriously talking" with Washington. Brent futures fell 4.8% to $65.97 a barrel, while U.S. West Texas Intermediate crude dropped 5% to $61.91 a barrel.
Crude had climbed last week as markets factored in a heightened chance of supply disruptions from the Middle East in response to repeated threats of military action. Those concerns diminished after the weekend remarks, and OPEC+ left production unchanged during a weekend meeting, as was widely anticipated.
What to watch this week
- Company earnings from a broad swathe of EuroSTOXX components, with about 30% of the index by market value due to report.
- Central bank meetings at the ECB and the Bank of England, both expected to hold rates steady.
- US corporate results from major tech firms, including Alphabet and Amazon, and continued scrutiny of AI-related spending following Microsoft 's report on rising costs.
Bottom line
Markets opened the week with a risk-off tilt driven primarily by a severe correction in precious metals that has prompted margin pressure and sparked profit-taking. Corporate results and central bank decisions scheduled for later in the week are likely to influence direction, while developments in oil markets and Chinese manufacturing data add further variables for investors to monitor.