{"id":453909,"date":"2026-03-02T17:24:13","date_gmt":"2026-03-02T17:24:13","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/453909\/"},"modified":"2026-03-02T17:24:13","modified_gmt":"2026-03-02T17:24:13","slug":"european-markets-slide-as-iran-war-trade-joins-the-global-ai-scare-trade","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/453909\/","title":{"rendered":"European markets\u00a0slide\u00a0as Iran\u00a0\u2018war trade\u2019\u00a0joins the\u00a0global\u00a0AI\u00a0\u2018scare trade\u2019\u00a0"},"content":{"rendered":"

\u201cEvents,\u201d former U.K. Prime Minister Harold Macmillan opined when asked what most troubled him about the future. \u201cMy dear boy, events.\u201d America and Israel\u2019s attack on Iran and the killing of Supreme Leader Ayatollah Ali Khamenei has once again created an event in the Gulf, with associated global market and economic ramifications.<\/p>\n

Opening this morning for the first working day since the military attacks this weekend, European stock markets slumped, and the price of oil and gas surged.\u00a0Gold is up, and the dollar\u2014still a safe\u00a0bet\u00a0even\u00a0amid\u00a0Donald\u00a0Trump\u2013induced volatility\u2014is following.\u00a0The AI \u201cscare trade\u201d\u00a0has now been joined by the \u201cwar trade\u201d as investors\u00a0watch missiles rain down on\u00a0TV\u00a0news channels and indexes turn red on their trading screens. Geopolitics\u00a0is informing\u00a0the\u00a0risk\u00a0premium du jour.\u00a0<\/p>\n

Airlines and\u00a0hotel groups led the fall\u00a0this morning, reflecting investor concerns that conflict across the Middle\u00a0East will halt\u00a0travel plans\u2014for both business and pleasure\u2014and lead to extended closures\u00a0of airspace\u00a0across\u00a0one of\u00a0the\u00a0world\u2019s\u00a0most\u00a0important\u00a0travel hubs.\u00a0Dubai International Airport is the largest in the world, handling 95.2 million passengers in 2025, a vital trading post\u00a0between\u00a0America, Europe,\u00a0India,\u00a0and the Asia-Pacific.\u00a0<\/p>\n

The selloff has been sharp.\u00a0This morning the\u00a0European benchmark\u00a0index,\u00a0the\u00a0Stoxx 600, fell\u00a01.6%, the London FTSE 100\u00a0fell 0.75%,\u00a0and\u00a0the German DAX\u00a0was\u00a0down 1.6%.\u00a0Banking share prices weakened (Barclays<\/a> was down 5%), and IAG, the owner of Iberia and British Airways, was down more than 6%.\u00a0The United Arab Emirates has halted financial market operations for two days as a precaution.\u00a0\u00a0<\/p>\n

Read more: \u2018I sell millions of Halloween costumes to Americans. Mr. President, here\u2019s my takeaway from the wild tariffs ride\u2019<\/a><\/p>\n

Pressure is not all in one direction.\u00a0Defense stocks, such as Thales and BAE Systems<\/a>,\u00a0rose, as did energy producers such as Shell<\/a>.\u00a0War brings winners as well.\u00a0<\/p>\n

How long will the war trade affect the markets?\u00a0The president has suggested that military action against Iran may last for as long as four weeks, increasing pressure on the Strait of Hormuz through which 20%\u00a0of global oil is transported.\u00a0The other major route out of the Gulf, the Red Sea via Bab\u00a0el-Mandeb, is already at risk from attacks by Houthi rebels at war in Yemen.\u00a0Insurers are jumpy about any shipping\u00a0trying to negotiate\u00a0the Gulf.\u00a0<\/p>\n

If the oil price hits $100, expect an inflation spike in the summer of this year and a slowing of global growth.\u00a0The pricing of\u00a0European gas futures\u00a0is\u00a0already up 25%.\u00a0A Ukraine-style energy price leap is not out of the question.\u00a0<\/p>\n

\u201cThe main transmission channel of the Iran crisis to the global economy and macro markets is its impact on energy markets, with the combination of severity and expected longevity key,\u201d Goldman Sachs said in a note to investors this weekend.\u00a0<\/p>\n

\u201cIncreased risk premia are the\u00a0likely initial\u00a0response for markets. While recent moves can extend, markets went into the weekend with some amount of growth downside and inflation upside priced.\u201d\u00a0<\/p>\n

Investors are already\u00a0nervous,\u00a0and the continuing conflict will only increase\u00a0\u201crisk-off\u201d\u00a0behaviors. With\u00a0significant\u00a0question\u00a0marks\u00a0over the delivery of\u00a0hundreds of\u00a0billions of dollars in investment\u00a0to support the development of\u00a0agentic AI infrastructure, confidence will only become more fragile.\u00a0<\/p>\n

There is no panic yet. As Goldman says, it would need an extended oil price rise to\u00a0weigh down\u00a0the global\u00a0economy,\u00a0and it is likely that initial effects will be localized\u00a0around energy,\u00a0defense, travel,\u00a0and transport\u00a0sectors.\u00a0As share prices fall on the\u00a0initial\u00a0news flow,\u00a0\u201cbuying the dip\u201d\u00a0will come into play.\u00a0<\/p>\n

At the World Economic Forum meeting in Davos in January, I spoke to the chief executive of one of Europe\u2019s largest technology firms. \u201cGeopolitical volatility is here to stay;\u00a0you have to be ready for it\u00a0at all times\u2014anything could happen.\u201d Pricing in\u00a0that\u00a0risk is the new normal.\u00a0<\/p>\n

\"\" <\/p>\n","protected":false},"excerpt":{"rendered":"\u201cEvents,\u201d former U.K. Prime Minister Harold Macmillan opined when asked what most troubled him about the future. \u201cMy…\n","protected":false},"author":2,"featured_media":453910,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[554,733,4308,141,585,163948,163949,467,2987,4762,86,56,54,55],"class_list":{"0":"post-453909","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-ai","9":"tag-artificial-intelligence","10":"tag-artificialintelligence","11":"tag-donald-trump","12":"tag-iran","13":"tag-letter-from-london","14":"tag-londonarticles","15":"tag-markets","16":"tag-oil","17":"tag-stock","18":"tag-technology","19":"tag-uk","20":"tag-united-kingdom","21":"tag-unitedkingdom"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/453909","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=453909"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/453909\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/453910"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=453909"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=453909"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=453909"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}