Markets Plunge as Middle East Conflict Escalates
European stock markets opened sharply lower on Monday, March 2, 2026, as tensions in the Middle East intensified following attacks involving the United States, Israel, and Iran. The escalation, including reports of the death of Ayatollah Ali Khamenei, has fueled fears of wider regional instability and disruption to global trade, sending shockwaves through financial markets.
European Markets in Freefall
Major European indices experienced significant declines in early trading. Madrid led the losses, falling 2.4%, followed by Frankfurt at -2%. Milan (-1.9%), Paris (-1.8%), and London (-1%) also posted substantial drops.
Asian Markets React Negatively
Asian stock markets closed sharply lower, reflecting growing concerns about the potential impact on international trade, particularly the possibility of closure of the Strait of Hormuz. Tokyo declined by 1.35%, while Hong Kong fell 2%, Shenzhen decreased by 0.6%, Seoul dropped 1%, and Mumbai lost 1.8%. Shanghai bucked the trend, rising slightly by 0.5%.
Oil and Gas Prices Surge
The conflict has triggered a surge in energy prices. Oil prices jumped, with April WTI futures rising 6.94% to $71.67 per barrel and May Brent futures increasing 7.82% to $78.16 per barrel. Natural gas prices in Amsterdam soared by 30% to €41.6 euros per megawatt hour, driven by concerns about potential disruptions to supply through the Strait of Hormuz, a critical hub for global energy shipments. A fifth of the world’s crude oil and LNG passes through the Persian Gulf hub.
Airline Stocks Take a Hit
Shares of Asian airlines plummeted following the attacks and subsequent disruptions to global air traffic. Cathay Pacific, Qantas Airways, Singapore Airlines, and Japan Airlines all experienced declines of over 5%. Qantas, despite not flying directly to the Middle East, saw a 10.4% drop in early trading. The closure of key hubs in Dubai and Doha for the third consecutive day has left tens of thousands of travelers stranded.
Stock Market Highlights
On the Milan Stock Exchange, Leonardo rose 3.8% following a £1 billion order from the British government for new military helicopters. Fincantieri also saw gains, increasing by 2.01%. Eni (+2.03%) and Italgas (+1.37%) also performed well. However, industrial stocks and the credit sector faced pressure. Stellantis fell 4.74%, while banks experienced declines: Bper (-3.66%), Unicredit (-2.72%), Intesa Sanpaolo (-3.27%), BMps (-2.95%), and Mediobanca (-3.55%). Generali (-2.46%) and Unipol (-3.64%) also saw losses. Luxury stocks also declined, with Moncler (-2.6%) and Cucinelli (-3.57%) experiencing drops.
Dubai and Abu Dhabi Stock Exchanges Closed
The Dubai and Abu Dhabi stock markets were closed due to the ongoing conflict in the region, as announced by the Capital Market Control Authority (CMA) of the United Arab Emirates.
Currency Market Fluctuations
The dollar strengthened as risk aversion increased, trading at 1.1713 against the euro (compared to 1.1820 on Friday) and 157.13 yen (compared to 156.00). The euro/yen ratio stood at 184.06 (down from 184.40).