Andy Murray's return to Queen's fell flat as his 10-match winning streak on the British grass courts was ended by Australia's Alex de Minaur.
Former world number one Murray lost 6-3 6-1 and his hopes of earning a seeding for Wimbledon are all but over.
Spanish top seed Carlos Alcaraz earlier came through a tricky test to win on his debut at the Cinch Championships.
Alcaraz, 20, fought back against French lucky loser Arthur Rinderknech to win 4-6 7-5 7-6 (7-3) in the first round.
British number five Liam Broady, ranked 143rd, lost 1-6 6-4 6-3 to France's world number 46 Adrian Mannarino.