European shares lower to kick off the week

European equities started the week on a cautious note, with both the STOXX 50 and the STOXX 600 slipping 0.2% on Monday, as investors awaited a busy lineup of Federal Reserve speakers for guidance on the US monetary outlook.

Market participants are particularly focused on whether officials will push back against expectations for additional rate cuts this year, following last week’s decision to lower borrowing costs. The uncertainty kept trading volumes subdued, as risk appetite remained fragile.

Beyond central bank expectations, sentiment was also dampened by the latest US immigration policy proposals. President Donald Trump unveiled a new measure that would impose a $100,000 application fee for the widely used H-1B visa program, a move likely to significantly increase costs for firms dependent on highly skilled foreign workers.

Technology and outsourcing companies, which rely heavily on these visas, are expected to be particularly impacted, adding another layer of uncertainty for the sector and broader equity markets.

Telecoms, automakers, and banks led sectoral losses across Europe. Automaker shares were among the hardest hit: Volkswagen slumped 4.3% after cutting its full-year profit outlook, citing weaker demand and higher input costs. Porsche declined 4.7% after announcing delays in the rollout of its electric vehicle lineup, fueling concerns over its ability to compete in a tightening EV market.

In the banking sector, Spanish lenders came under pressure after news that a French bank raised its takeover bid for Sabadell, sending Sabadell’s shares down 4.1% and BBVA’s nearly 2% lower amid speculation of consolidation risks and valuation concerns.

Not all corporate news was negative. Semiconductor equipment maker ASML Holding rose more than 3%, reaching one-year highs of €808.50. The gains came on renewed optimism around resilient chip demand, despite ongoing trade tensions and geopolitical headwinds. The move helped support the broader technology sector, which outperformed relative to the more cyclical industries tied to manufacturing and trade.

Looking ahead, traders will keep a close eye on Fed commentary for signals that could recalibrate expectations on the pace and scale of further policy easing. Additionally, corporate earnings updates and geopolitical developments—ranging from EU trade negotiations to US-China relations—are likely to set the tone for near-term market direction.

For now, European equities remain caught between cautious optimism on central bank support and persistent headwinds from policy uncertainty and sector-specific pressures.