European Shares Set To Drift Lower As Trade, Ukraine Tensions Mount

(RTTNews) - European stocks are seen opening broadly lower on Monday in the wake of rising geopolitical and trade tensions.

Ukraine launched a large-scale drone attack on Russia over the weekend, retaliating against Russian aggression seen last week but further undermining upcoming peace talks.

On the tariff front, U.S. President Donald Trump has announced that import tariffs on steel and aluminum will double to 50 percent starting June 4, in what he called a move to protect domestic industry.

China has accused the U.S. of violating their recent trade deal and vowed to take measures to defend its interests, dimming the prospect of an immediate leadership call that Trump wants to have to further bilateral talks.

In another development, U.S. Commerce Secretary Howard Lutnick indicated that tariffs are here to stay despite an ongoing legal battel.

In an interview with Fox News Sunday, he said that Trump "has so many other authorities that even in the weird and unusual circumstance where this was taken away, we just bring on another or another or another."

Trump weighed in hours later on his Truth Social platform: "If the Courts somehow rule against us on Tariffs, which is not expected, that will allow other Countries to hold our Nation hostage with their anti-American Tariffs that they would use against us. This would mean the Economic ruination of the United States of America!"

Investors may also monitor the latest developments with U.S. federal tax-and-spending legislation that threatens to burgeon U.S. deficit.

The economic impact of Trump's tax package is seen as a short-term stimulus at the potential cost of long-term drag.

Asian markets were broadly lower, with Hong Kong and South Korea leading regional losses as data showed Chinese manufacturing activity contracted for a second consecutive month in May.

The dollar edged lower in Asian trade while gold traded higher above $3,300 per ounce after Federal Reserve Governor Christopher Waller said the U.S. central bank still remained open to cutting interest rates later this year.

Oil prices jumped over 2 percent after reports of more U.S. sanctions on Moscow.

Bloomberg reported that there was a bipartisan push in U.S. Congress to impose more sanctions on Russia's oil industry, this time pressuring major buyers such as China and India.

Looking ahead, final manufacturing Purchasing Managers' survey results from the euro area and the U.K. may garner some attention later in the day.

U.S. stocks fluctuated before ending mixed on Friday as Treasury Secretary Scott Bessent said trade discussions with China had been "a bit stalled" and President Trump accused China of totally violating a tariff agreement reach last month.

The Dow edged up by 0.1 percent as data showed U.S. consumer spending increased marginally in April and the Federal Reserve's primary inflation rate, the core PCE price index, fell in April to its lowest level since March 2021.

The S&P 500 finished marginally lower and the tech-heavy Nasdaq Composite shed 0.3 percent.

European stocks closed mostly higher on Friday as falling German inflation boosted hopes for ECB rate cuts.

The pan European STOXX 600 inched up by 0.1 percent. The German DAX rose 0.3 percent and the U.K.'s FTSE 100 added 0.6 percent while France's CAC 40 ended down 0.4 percent.