European stocks are set to open lower Monday as investors eye political developments in the U.K., where the fragile government of Theresa May faces a crucial weeks of tests that could result in a second election later this fall, and test the market's resilience to a troubling pullback in tech stocks Friday in the United States.
Britain's FTSE 100 is expected to give back around 33 points at the open, according to financial bookmakers IG, with similar declines forecast for most major indices around the region. Markets in France, however, will likely buck the trend as investors take confidence in a resounding win for President Emmanuel Macron's Republic on the Move party in the first round of the country's parliamentary elections.
In the U.K., May spent much of the weekend forming alliances both inside and outside of her Conservative party in an attempt to mitigate the damage from Thursday's general election, which erased her majority in parliament and threw her Brexit ambitions into chaos.
A so-called "supply and confidence" arrangement with lawmakers from Northern Ireland - which stops short of a full coalition - could buy May and her colleagues a few more weeks of stability, but the potential for an early collapse is real and the lack of a true mandate to negotiate an EU exit has changed the tenor of discussions that are set to begin next week.
That said, the pound was relatively unchanged at 1.2752 against the U.S. dollar after its near 2% tumble in Friday trading when the election results became known. The dollar held its ground for most of the session, however, even as the market adopted a more cautious tone, with the dollar index trading modestly lower from Friday's close at 97.16 as investors get positions in place ahead of this week's two-day rate setting meeting of the U.S. Federal Reserve.
Overnight in Asia, the broadest measure of regional shares, the MSCI Asia ex-Japan index, fell 0.52% significant declines for some big sector names including Samsung Electronics (SSNLF) , Sharp (SHCAY) and Taiwan Semiconductor. In Japan, the Nikkei 225 also slid 0.4% as tech-names such as Tokyo Electron, Advantest Corp. and TDK falling notably.
Friday's tech sector sell-off, which saw Apple falling nearly 4%, Facebook (FB) - Get Report falling 3.3%, Google parent Alphabet (GOOGL) - Get Report falling 3.4% and the S&P 500 tech index slumping 2.7, was sparked in some degree to a Goldman Sachs note that cautioned on sector growth rates and a Bloomberg report that suggested Apple iPhones that are expected later this year will use a slower chip embedded inside.
The Nasdaq is slated to open 8.5 points, or 0.15%, lower at the opening bell, according to U.S. equity futures prices, while the Dow Jones Industrial Average and S&P 500 are priced for a 0.11% declines.