LONDON/FRANKFURT — European equity markets are set for a sharp downturn at the opening bell on Monday, March 2, 2026, as investors scramble to reassess risk following intense U.S.-Israeli military strikes against Iran over the weekend. With confirmed casualties including Iran’s Supreme Leader, Ayatollah Ali Khamenei, and the initiation of retaliatory Iranian strikes targeting U.S. bases in the Gulf, financial markets are bracing for a prolonged period of high volatility.
Futures tied to the Euro Stoxx 50 and Germany’s DAX 40 were down significantly in early trading, signaling a widespread retreat from risk assets across the continent.
Energy Crisis and the “Strait of Hormuz” Risk
The primary driver of market anxiety is the immediate threat to global energy supplies. The conflict has centered on the Strait of Hormuz, a critical chokepoint through which approximately 20% of the world’s oil passes daily.
- Oil Price Surge: Brent crude futures jumped by nearly 13% in early trading, briefly topping $82 a barrel—its highest level since early 2025. Analysts warn that if the Strait is effectively closed, prices could test the $100-per-barrel mark.
- Supply Shock: Major shipping firms have voluntarily paused transit through the area, and insurance costs for vessels in the Persian Gulf have skyrocketed, threatening to exacerbate global inflationary pressures.
Defensive Posture: Gold Rises, Airlines Fall
In a classic “risk-off” maneuver, investors are fleeing equities in favor of defensive assets. Gold surged to nearly $5,350 per ounce, acting as a barometer for investor fear. Conversely, cyclical sectors are facing intense pressure.
- Travel Disruption: European airlines are bracing for a massive sell-off as airspace closures in the Middle East and rising fuel costs disrupt operations.
- Defense Stocks: While broader markets slump, European defense contractors may see contradictory gains as governments accelerate military spending pledges in response to the escalating crisis.
As European bourses reopen, the focus will remain on whether the conflict escalates beyond limited strikes or moves toward a wider regional war.
