European stock markets opened broadly lower as prospects for a swift resolution to the U.S.-Iran conflict dimmed, and UK Prime Minister Keir Starmer's leadership faced mounting pressure.
The pan-European Stoxx 600 index fell by 0.8%, with all sectors and major bourses trading in negative territory.
Investors are closely monitoring the escalating political crisis in the UK. Following the Labour Party's significant losses in last week's local council elections, over 70 Labour MPs, alongside government ministers, have jointly called for Starmer to resign or announce a clear timeline for his departure.
However, Starmer firmly stated during Tuesday's regular cabinet meeting that he has no intention of stepping down and will continue to "focus on governing." He reminded colleagues that the Labour Party has internal procedures for removing its leader, which have not yet been triggered.
The Prime Minister has taken responsibility for the election defeat, acknowledging on Monday that there are "doubters" within the party. He pledged to "address the significant challenges facing the country," but these remarks failed to reassure key party figures, with several political aides resigning on Monday evening.
UK government bond (gilt) yields continued their rise in early Tuesday trading. The benchmark 10-year gilt yield increased by nearly 12 basis points to 5.126%.
Concurrently, the British pound fell by 0.6% against the U.S. dollar and by 0.3% against the euro. UK bank stocks led the declines on the FTSE, with NatWest Group falling 4.1%, Lloyds Banking Group down 4.2%, and Barclays declining 4.1%.
Optimism surrounding U.S.-Iran peace talks was dampened on Monday evening. U.S. President Donald Trump stated that Iran's response to a U.S. proposal to end the war was "unacceptable," and the ongoing ceasefire was "hanging by a thread."
Trump told reporters in the Oval Office that the month-long ceasefire was "extremely fragile."
This rhetoric contributed to rising oil prices, while Asia-Pacific markets were mixed overnight. U.S. stock index futures were flat on Monday evening as investors awaited the release of the April Consumer Price Index (CPI) data. A Dow Jones survey of economists forecasts a year-on-year inflation increase of 3.7%.
**Corporate Earnings in Focus on Tuesday**
Corporate earnings are also a key focus. Siemens Energy, Munich Re, and Imperial Brands are among the companies scheduled to provide trading updates on Tuesday.
German biotech giant Bayer reported its first-quarter results. Adjusted for special items, operating profit rose 9% year-on-year to €4.5 billion (approximately $5.3 billion), surpassing market expectations. The company reaffirmed its full-year guidance.
Bayer's shares rose over 6% in early trading.
Late last month, Bayer petitioned the U.S. Supreme Court in an attempt to end thousands of lawsuits related to its Roundup herbicide. Bayer acquired Roundup producer Monsanto for $63 billion in 2018 and has since been embroiled in years of litigation over allegations that Roundup's glyphosate ingredient causes cancer.
Bayer expects the Supreme Court to rule on the case in June. In Tuesday's earnings report, the company stated that Roundup litigation remains a "legal risk." Monsanto reached a major settlement regarding related lawsuits in early 2026, including a proposed nationwide class-action settlement with a maximum payout of $7.25 billion over 21 years.
The settlement allows claimants to opt out by June 4, with Monsanto retaining the right to terminate the class-action settlement if the number of opt-outs is "excessive."
Additionally, London-listed telecom giant Vodafone released its full-year results on Tuesday morning. Revenue increased by 8% year-on-year to €40.5 billion, slightly below the LSEG consensus estimate.
Vodafone attributed the growth to strong service revenue and the integration of UK mobile operator Three. The company swung from a loss of €40 million the previous year to an operating profit of €2.8 billion, exceeding market expectations of €2.1 billion.
Vodafone's shares were down 3.2% at last check.
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