Stocks Market
European Stock Markets Slip as Middle East Tensions Surge
European equity indices opened sharply lower on Monday, with the CAC 40, DAX and FTSE 100 all falling more than 0.5 %. The sell‑off is being driven by escalating geopolitical risk after Israel announced large‑scale strikes on Tehran and renewed attacks on Hezbollah in Lebanon, while investors also await key manufacturing PMI data. Defence and energy stocks gained on the tension, whereas airline shares plunged amid fears of disrupted traffic and higher fuel costs.
Listen to this article
Unlock audio versions of premium articles and more with a Pro subscription.
European indices slide sharply
At 08:08 GMT, France’s CAC 40 fell 2.10 % to 8,400.60 points. Germany’s DAX dropped 2.22 %, while Britain’s FTSE 100 slipped 0.66 %.
Across the continent the EuroStoxx 50 lost 2.37 %, the FTSEurofirst 300 was down 1.64 % and the STOXX 600 fell 1.65 %.
Geopolitical shockwaves drive the sell‑off
Markets remain glued to the escalating Middle‑East conflict. Israeli forces announced massive strikes on Tehran overnight, following Iran’s retaliatory actions on Sunday after a joint US‑Israeli operation.
The Israeli Defence Forces also said they have begun targeting Hezbollah positions in Lebanon after the Iran‑backed militia fired rockets toward Israel, raising the risk of a new front.
U.S. President Joe Biden told the Daily Mail the war could last another four weeks and that attacks would continue until American objectives are met.
Economic data on the side
Investors are also waiting for the release of manufacturing PMI numbers. In Germany, retail sales shrank 0.9 % in January – a sharper decline than expected, according to the Federal Statistical Office.
Sector winners and losers
The defence sector rallied on the heightened tensions. Thales, Dassault Aviation and Exosens rose between 3 % and 6 %. In Germany, Rheinmetall and Renk gained 3.6 % and 5.4 % respectively, lifting the defence index by about 1.3 %.
Energy stocks also turned green, buoyed by higher oil prices. TotalEnergies, Shell and Viridi climbed 5‑6 %, while the broader energy index jumped 2.5 %.
Airline shares, however, bore the brunt of the uncertainty. Air France‑KLM, Lufthansa and IAG fell 7‑10 %, pushing the airline index down 5.5 % amid fears that regional tension could disrupt traffic and raise fuel costs.