US-Israel Conflict with Iran Roils Markets, Stokes Global Economic Fears
The conflict between the United States and Israel against Iran has entered its fourth day, sending shockwaves through global financial markets and raising concerns about energy supply chain disruptions and broader economic instability. European stocks experienced a significant downturn, with the Stoxx 600 index shedding €565 billion in market capitalization.
Market Reaction: Oil, Gas, and Equity Declines
Raw material prices have surged in response to the escalating tensions. Brent crude oil rose to $83.60 per barrel, a 7.6% increase, while West Texas Intermediate (WTI) climbed to $76.80, up 8%. Natural gas prices in Amsterdam (TTF) saw an even more substantial increase, jumping 20.4% to €53.6 per megawatt hour.
Analysts warn that central banks have limited tools to address supply-side shocks. “Central banks cannot produce oil. Monetary policy can curb demand, but not compensate for a supply shock,” noted Laura Cooper, global investment strategist at Nuveen [1]. Rising energy prices are effectively acting as a tax on consumers, further complicating the economic outlook.
February inflation in the Eurozone rose to 1.9% annually, up from 1.7% in January, according to Eurostat [1].
Trump Signals Potential for Dialogue
A potential, albeit limited, opening for de-escalation emerged with a statement from U.S. President Donald Trump. In a phone call to Politico, Trump indicated that “it is not too late” to commence a dialogue with new representatives of the Iranian government. He also cautioned that Iran’s military capacity would “constantly deteriorate” and predicted continued missile launches. These comments briefly supported a modest recovery in market prices.
Supply Chain Concerns and Oil Price Projections
Investors are focused on the duration of the hostilities. President Trump has suggested attacks could last four to five weeks, but acknowledged the possibility of a longer conflict [1]. The escalation of the conflict raises the risk of a blockade of critical energy supply chains, particularly through the Strait of Hormuz, a vital shipping lane for crude oil and LNG.
Some observers predict that oil prices could reach $100 per barrel if the conflict persists, despite increased production from OPEC+ [1].
European Market Performance
Milan experienced the steepest decline among major European markets, closing down 3.9%, followed by Madrid at -4.6%. Paris fell 3.4%, Frankfurt dropped 3.6%, Amsterdam decreased 2.5%, and London closed down 2.8%. Wall Street also saw losses, with major indices down around 1.5 percentage points.
In Milan, Lottomatica (+3.3%) was a notable gainer, driven by positive 2025 earnings forecasts. Recordati (+1.3%) also saw gains, while Leonardo (-0.4%) traded mixed. The energy sector performed poorly, with Saipem (-5.1%) and Italgas (-6.3%) leading the declines. Luxury stocks also suffered, with Moncler (-6.5%) at the bottom of the index.
Currency and Precious Metal Movements
The U.S. Dollar strengthened, with the euro falling to $1.1581. Analysts attribute this movement to oil and gas price fluctuations. Precious metals experienced a reversal, with spot gold dropping to $2,110 per ounce (-4%) and spot silver falling to $83 per ounce (-7%).
March 3, 2026 (modified March 3, 2026 | 7:22 pm)