European markets slide as Iran ‘war trade’ joins the global AI ‘scare trade’

Fortune

by Kamal Ahmed

March 2, 2026

AI-Generated Deep Dive Summary

European stock markets dropped as geopolitical tensions in the Middle East triggered a "war trade," joining the ongoing AI-related market volatility. Investors are grappling with concerns over extended conflicts impacting oil supplies, inflation, and global growth. The U.S., Israel, and Iran's escalating military actions have sent oil prices soaring, with gold and the dollar gaining as safe-haven assets. The Stoxx 600 fell by 1.6%, while major indices like the FTSE 100 and German Dax saw notable declines. Industries reliant on Middle East travel, such as airlines and hotels, were hit hard, reflecting fears of disrupted business and leisure plans. Dubai International Airport's shutdown underscores potential long-term impacts on global trade. Defense and energy sectors showed resilience amid the chaos, with companies like Thales and Shell experiencing gains. However, broader market uncertainty persists, particularly in banking and travel stocks. The conflict's longevity could further strain oil prices, potentially reaching $100 per barrel, sparking inflation and slowing global growth. Goldman Sachs highlights the dual risks of inflation and economic slowdown, emphasizing the need for investors to adapt to heightened risk premia. The situation underscores the new normal of geopolitical volatility, where businesses must prepare for unexpected disruptions.

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Originally published on Fortune on 3/2/2026