Must read: European oil, defence, airlines and luxury stocks react to new conflict
ii’s head of investment rounds up the morning’s big news.
2nd March 2026 09:51
by Victoria Scholar from interactive investor
European/US markets
Risk-off mood grips the European market open, with the DAX and CAC both down over 2%, while the FTSE 100 is suffering a more modest 1% decline, supported by gains for defence, miners, and oil companies. The CBOE Volatility Index has surged to a more than three-month high as markets digest the fallout from US and Israeli attacks on Iran over the weekend which killed Supreme Leader Ayatollah Ali Khamenei.
- Invest with ii: Open a Stocks & Shares ISA | ISA Investment Ideas | Transfer a Stocks & Shares ISA
European natural gas futures jumped over 20% and WTI and Brent crude have surged around 9% each. The global oil benchmark is trading around $80 a barrel amid worries about oil supply given that shipping has been halted via the Strait of Hormuz, which typically sees about 20% of global crude oil and LNG shipments pass through.
The Stoxx Europe 600 Oil & Gas index has hit a fresh record high with oil stocks such as Repsol SA (XMAD:REP), Shell (LSE:SHEL), BP (LSE:BP.), Galp Energia, and Eni SpA (MTA:ENI) surging. Shipping stocks such as A P Moller Maersk AS Class B (XETRA:DP4B) and Hapag-Lloyd AG (XETRA:HLAG) are also sharply higher, reflecting the potential for a significant increase in shipping rates.
Aerospace and defence stocks in Europe are also soaring on the back of the jump in geopolitical risk. Leonardo SpA Az nom Post raggruppamento (MTA:LDO), Rheinmetall AG (XETRA:RHM), Avio SpA (MTA:AVIO), Exosens SA (EURONEXT:EXENS) and BAE Systems (LSE:BA.) are rallying.
Investors are also flocking to safe havens with gold and silver both gaining around 3% each. Haven currencies such as the Swiss franc appreciated over the weekend, amid flight to safety flows.
- The Analyst: defence – how to play the new tech sector
- Market snapshot: FTSE 100 winners, losers and latest results
- Sign up to our free newsletter for investment ideas, latest news and award-winning analysis
Airspace closures and flight disruptions are weighing on travel stocks today. There have been a number of major airport closures in the Middle East including in Dubai and Abu Dhabi. Airline stocks such as Finnair, Norwegian Air, easyJet (LSE:EZJ), International Consolidated Airlines Group SA (LSE:IAG), Ryanair and Deutsche Lufthansa AG (XETRA:LHA) in Europe have all fallen sharply. Travel companies are also suffering in today’s trade including Rainbow Tours, TUI AG (XETRA:TUI1), and Jet2 Ordinary Shares (LSE:JET2).
Luxury stocks such as Lvmh Moet Hennessy Louis Vuitton SE (EURONEXT:MC), Kering SA (EURONEXT:KER), The Swatch Group AG Bearer Shares (SIX:UHR), and Hermes International SA (EURONEXT:RMS) are also struggling amid fears that the tensions in the Middle East could weigh on designer spending particularly in places such as Dubai, a global hub for luxury consumers, if there is less travel and tourism in the region. Industria De Diseno Textil SA Share From Split (XMAD:ITX) is also on track for its worst session in almost a year.
US futures are pointing to notable declines at the open on Wall Street with Nasdaq futures down around 2% and S&P and Dow futures down around 1.5% each.
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.