Europe open: Shares lower as traders eye Fed, ECB rate calls

(Sharecast News) - European shares opened sharply lower on Monday as traders continued to eye tariff threats from US President Donald Trump and looked ahead to interest rate decisions from the Federal Reserve and European Central Bank.

The pan-regional Stoxx 600 index was down 0.77% to 525.98 in early deals after hitting fresh records last week. Germany's DAX was 1.08% lower at 21,162.

"Last week wrapped up with a striking contrast: bullish momentum through most of the week gave way to a bearish close on Friday. Donald Trump's smooth inauguration and a bold $500bn AI infrastructure pledge fueled market optimism," said Swissquote Bank analyst Ipek Ozkardeskaya.

"However, the narrative shifted dramatically as Friday's PMI data exceeded expectations across the US and Europe. The stronger-than-anticipated economic indicators tempered hopes for Federal Reserve rate cuts, which had been bolstered by Trump's earlier calls for lower interest rates."

"A set of stronger-than-expected PMI data prompted investors to recalibrate their Fed outlook, weighing stronger economic growth against the likelihood of a more hawkish Fed response."

In equity news, budget carrier Ryanair gained after posting better-than-expected third-quarter profit and despite another cut in passenger number projections due to delays in Boeing aircraft delivery.

Reporting by Frank Prenesti for Sharecast.com