Tariffs, FTSE 100, DAX, CAC 40

European stock markets ended the first trading day of the week lower.

The Stoxx Europe 600 index was down 0.1%, France’s CAC 40 was lower by 0.2%, and Germany’s DAX was off by 0.3%. The U.K.’s FTSE 100 closed marginally in the black, with a 0.02% gain.

— Ganesh Rao

President Donald Trump’s move to double tariffs on steel and aluminum imports to 50% is likely to bite wind energy developer Orsted, according to analysts.

The Danish multinational booked a loss of 1.2 billion Danish kroner ($183 million) in its first-quarter results in May after the U.S. imposed 25% tariffs on imports of steel and aluminium. The company suggested the levy had hit the profitability of its Sunrise and Revolution Wind projects, as it had yet to import wind turbines into the U.S.

“Assuming Orsted have yet to move these equipment into the US in the weeks following the results, the announced 50% tariff is likely to lead to another c.DKK1.2bn impairment in 2Q,” said Citi analysts led by Jenny Ping in a note to clients on June 2. “We continue to wait for clarity around the outcome of US/EU tariff negotiation, which Orsted said a 20% tariff could add c.DKK 0.6bn, which has yet to be recognized in its accounts.”

The Wall Street bank analysts downgraded the stock to a “Sell” rating, saying “these tariff risks does not help Orsted’s equity story.”

Sydbank analysts agree that the raised tariff will hurt Orsted, but maintain their “Buy” rating.

“Ørsted is particularly hard hit by the steel and aluminum tariffs because the company does not have a local offshore wind turbine supply chain in the US,” said Jacob Pedersen, head of equity research at Sydbank.

“We do not expect the increased tariffs to have an impact on Ørsted’s plans to implement the two American projects. However, the tariff increase will again reduce the profitability of Sunrise Wind and Revolution Wind compared to Ørsted’s original assumptions.”

— Ganesh Rao

Shares of Sweden’s SSAB were 6.36% higher at 2 p.m. in London. The steel producer is “a beneficiary of higher US plate pricing,” analysts at Jefferies said in a Monday note, as investors assess the impact of a potential increase in U.S. steel tariffs to 50% from 25% starting Wednesday.

More broadly, the higher tariffs are a headwind for European steel companies which export to the U.S., analysts Cole Hathorn and Tommaso Castello also noted.

However, they continued that higher prices would benefit SSAB’s Americas division, which the company says is the largest heavy plate producer in North America.

— Jenni Reid

The mood in equities remains downbeat in Europe, with the regional Stoxx 600 index 0.25% lower at 10:30 a.m. U.K. time as investors eye the potential for escalating U.S.-EU tariffs. Autos stocks on the index are down 1.75%, technology stocks are down 1.2% and household goods are down 1%.

Oil and gas stocks remain on the rise, moving in tandem with higher crude prices after OPEC+ announced a supply hike rate lower than some analysts expected.

The Stoxx aerospace and defense index is 0.45% higher. Germany’s Hensoldt has jumped 11.6% after analysts at JPMorgan upgraded the stock to overweight from neutral.

The sector is also getting a boost from U.K. Prime Minister Keir Starmer, who outlined a series of new defense spending commitments, including new attack submarines.

Shares of Wegovy maker Novo Nordisk climbed 3% Monday as telehealth platform Hims & Hers is reportedly set to cut 4% of its workforce amid a U.S. ban on copycat weight loss drugs.

Danish pharmaceutical giant Novo has been battling a slowdown in sales in its largest market as a drug shortage ruling by the Food and Drug Administration had permitted the rise of cheaper compounded obesity drugs.

The FDA declared the shortage over in February and gave compounding pharmacies until May 22 to cease selling copies of the drug. 

— Karen Gilchrist

The British pound is up 0.7% against the U.S. dollar at 8:45 a.m. in London, nudging it back above the $1.35 level it has largely traded below for the last week.

The euro is 0.75% higher on the greenback, which is suffering as trade tensions escalate.

“Trump’s protectionist policies, speculated desire for a weaker [U.S. dollar] and tax bill seem to have accelerated the USD decline of late,” analysts at Maybank said Monday.

“Trump’s capricious nature may continue to inject volatility in the markets but unlike past episodes of risk aversion, the USD was punished most discernibly as part of the “Sell America” narrative.”

— Jenni Reid

European equities are seeing a broadly negative start to the new trading week and month.

The regional Stoxx 600 index is down 0.18%, with France’s CAC 40 and Germany’s DAX lower by 0.43% and 0.22%, respectively. The U.K.’s FTSE 100, however, pushed 0.08% higher, helped by an 0.57% rise in oil and gas stocks as prices jump.

Autos stocks fell 1.4% amid fears that a slew of recent developments in the Trump tariff story could lead to more stringent tariffs on the sector, particularly after the U.S. president unexpectedly announced a hike in steel duties to 50%. Risk-sensitive technology stocks dropped 1%.

Oil prices are also gaining — ICE Brent Crude futures with August expiry are trading 2.29% higher at $64.22 per barrel. Producer association OPEC+ on Saturday announced a supply increase of 411,000 barrels per day for July, similar to its hikes in May and June.

ING strategists Warren Patterson and Ewa Manthey said in a Monday note that prices may nonetheless be rallying because there were suggestions the supply increase could have been even bigger.

— Jenni Reid

French pharmaceutical group Sanofi announced this morning that it will acquire Massachusetts-based Blueprint Medicines Corporation for an equity value of $9.1 billion, a move to expand its portfolio in rare immunological diseases.

Key to the deal is the drug Ayvakit/Ayvakyt, which has been approved in the U.S. and EU and is used to treat advanced and indolent systemic mastocytosis.

Good morning from London, where futures data from IG suggest stock markets will nudge higher at the open — following declines in France, Germany and Italy.

U.S. tariffs will be in focus yet again this week, after President Donald Trump said Friday that he will double tariffs on steel imports from 25% to 50% on June 4. The European Union criticized the move over the weekend, saying it undermines wider trade negotiations and will lead to higher costs for businesses and consumers on both sides of the Atlantic.

Investors will also be monitoring any developments in trade talks between the U.S. and China, which soured last week. National Economic Council director Kevin Hassett suggested Sunday that Trump and China’s President Xi Jinping could have a conversation as soon as this week.

China on Monday refuted Washington’s claims that it had broken the Geneva trade agreement, instead accusing the U.S. for breaching deal terms, signaling talks between the worlds top two economies have taken a turn for the worse.

Trade frictions between Washington and Beijing have flared up after a hiatus following a meeting between U.S. Treasury Secretary Scott Bessent and his Chinese counterpart He Lifeng in Geneva, Switzerland, that had led them to suspend most tariffs on each other goods for 90 days.

The Trump administration has ratcheted up export restrictions on semiconductor design software and chemicals to China, while announcing it would revoke visas for Chinese students, drawing ire from Beijing.

Read the full story here.

—Anniek Bao