European markets

European stock markets were all in negative territory on Monday morning after weak sentiment in Asian markets, where Japan’s benchmark Nikkei 225 index plunged more than 5% and Taiwan’s benchmark fell 4.4%.

ADVERTISEMENT

ADVERTISEMENT

Other Asian markets also tumbled after oil prices soared to nearly $120 a barrel, casting a shadow over economies heavily dependent on imported crude and gas from the region.

In Europe, London’s FTSE 100 was down 1.6%, while Frankfurt’s DAX, Paris’s CAC 40 and Milan’s FTSE MIB were all down more than 2.4%, as of 09:30 CET. Madrid’s IBEX 35 fell nearly 2.7%, and the pan-European Stoxx 600 lost about 2%.

While rising oil and gas prices are threatening Europe’s economic outlook this year, trading sentiment was further impacted on Monday by worse-than-expected data from Germany.

German industrial production and factory orders both fell at the start of the year. Output decreased by 0.5% in January following a revised 1% decline the previous month, the statistics office said on Monday.

Meanwhile, investor expectations are rising that the European Central Bank could raise benchmark interest rates this year, as soaring energy prices fuel fears that inflation may surge.

The panic in the stock market unfolded as oil prices became the main focus for investors.

Oil prices soaring

Oil prices rocketed higher as both sides in the Iran conflict struck new targets over the weekend, including civilian infrastructure. The war, now in its second week, involves regions critical to the production and transport of oil and gas from the Persian Gulf.

Prices moderated after the Financial Times reported that some members of the Group of Seven (G7) were considering releasing strategic oil reserves to ease pressure on markets. The unconfirmed report cited unnamed sources familiar with the discussions.

Oil prices spiked near $120 per barrel before falling back on Monday as the conflict intensified, threatening production and shipping in the Middle East and rattling global financial markets.

The price for a barrel of Brent crude, the international benchmark, surged to $119.50 early in the day but later traded around $107.80.

West Texas Intermediate (WTI), the US benchmark, spiked to $119.48 per barrel but fell back to around $103 by the European market open.

Strikes on Iranian oil facilities risk increasing pressure on an already tight global energy market, analysts warned. Lindsay James, investment strategist at Quilter, said “Iran accounts for roughly 4% of global oil supply, and around 90% of its exports are directed to China.”

The world’s second-largest economy has vast reserves, but analysts say any prolonged damage to Iran’s export capacity could weigh on its economic recovery and eventually affect global markets.

James also warned that attacks on shipping and energy infrastructure in the Gulf risk escalating tensions and unsettling markets that had initially expected the conflict to be resolved quickly.

After disruptions in the Strait of Hormuz linked to the conflict, the European gas market is also under pressure. Natural gas futures jumped more than 14% on Monday to above €61 per megawatt-hour, nearing their highest level in three years and extending last week’s 67% surge.

Several major producers in the region have cut back output, and Qatar’s Ras Laffan facility — the world’s largest liquefied natural gas (LNG) plant — was shut down last week.

Russia has also warned it could halt natural gas exports to Europe, adding to market anxiety.

At the same time, Europe’s gas reserves remain low, with EU storage levels below 30% and requiring refilling.

Early Monday, the US dollar, which retains its status as a safe-haven asset, gained against other major currencies. It was trading at 158.46 Japanese yen, up from 158.09 late Friday. The euro rose slightly to $1.1558 from $1.1556.

In other trading, gold prices were down more than 1% on Monday morning in Europe, trading around $5,100, while cryptocurrencies were mostly higher. One bitcoin traded at $67,774, up 0.7%.

IMF: ‘Think of the unthinkable and prepare for it’

As fears grow over how long the war could last — and with Asian markets, often seen as engines of global growth, under heavy pressure — International Monetary Fund Managing Director Kristalina Georgieva warned that policymakers must prepare for the “unthinkable.”

“If the new conflict proves prolonged, it has clear and obvious potential to affect market sentiment, growth, and inflation, placing new demands on policymakers,” Georgieva said in a keynote speech at a symposium in Tokyo on Monday.

She reminded her audience that, as a rule of thumb, every 10% increase in oil prices — if sustained through most of the year — could raise global headline inflation by about 40 basis points and reduce global output by 0.1–0.2%.

“And if, as we all hope, the conflict ends soon, then be sure that, before long, some new shock will come. My advice to policymakers everywhere in this new global environment? Think of the unthinkable and prepare for it,” she added.

European stock markets turned early gains into losses by early afternoon, following a rally in Asian markets, as investors searched for direction nearly a week after the United States and Israel launched strikes on Iran that sent global markets on a rollercoaster.

ADVERTISEMENT

ADVERTISEMENT

By 2 p.m. CET, Germany’s DAX was down by 0.2%, similar to the CAC 40 in Paris and Britain’s FTSE 100.

Madrid’s IBEX stood out by gaining 0.3% as the European benchmark European Stoxx 600 was down by a few points.

Before noon, European trading followed strong gains in Asia, where South Korea’s Kospi jumped by more than 9%, recovering much of Wednesday’s 12.06% fall.

“A decent showing on Wall Street last night and a solid performance from Asia on Thursday helped to spur part of Europe into a higher gear,” said Dan Coatsworth, head of markets at AJ Bell, commenting on the morning trade.

Uncertainty about the war in the Middle East has continued to rattle financial markets, with investors closely watching movements in the oil price.

Crude prices continued to rise. US benchmark WTI was trading 3% higher at around $76.8 a barrel, while the international benchmark Brent crude was up 2% after 2 pm CET.

“Brent crude continued to move higher, nudging above $83 per barrel and stoking fears that energy bills will go through the roof,” Coatsworth said.

“Oil is so important to the world economy and to see the price rise so quickly in just a week could leave investors feeling dazed and confused.”

He added that the situation in the Middle East was unfolding rapidly, making it difficult for investors to judge whether markets were facing a prolonged energy crisis or “just a short, sharp shock”.

Meanwhile, US futures slipped as Iran launched more missiles at Israel on the sixth day of the conflict.

The latest escalation included Iranian attacks on Israeli and American bases. Iran warned the United States would “bitterly regret” torpedoing an Iranian warship in the Indian Ocean, while a religious leader called for “Trump’s blood”.

Israel said it had begun a “large-scale” attack on Tehran.

On Wednesday, US stocks rose as oil prices steadied, albeit temporarily.

Investor sentiment was also supported by a report showing growth in US businesses in the real estate, finance and other services sectors accelerated last month at the fastest pace since the summer of 2022.

The S&P 500 rose 0.8%, erasing much of its losses since the conflict with Iran began.

The Dow Jones Industrial Average added 0.5%, while the Nasdaq Composite climbed 1.3%.

Another report suggested US private-sector employers increased hiring last month, a potentially positive signal ahead of a broader US government labour market report due on Friday.

Investors remain concerned about how long the conflict could last, how much inflation may rise due to higher oil prices, and what impact that could have on corporate profits.

Gains in major technology companies also lifted Wall Street.

Amazon rose 3.9%, while Nvidia added 1.7%. As two of the largest companies in the US market by value, their movements have a significant impact on the S&P 500.

Wednesday’s strong economic data was also welcome news for the Federal Reserve, which is trying to keep the labour market strong while bringing inflation under control.

However, the jump in oil prices could complicate that task by pushing inflation higher.

In other dealings on Thursday, gold trade was slightly down by early afternoon, losing 0.3% and traded at $5,120 an ounce.

The US dollar traded at 157.64 Japanese yen, while the euro slipped to $1.1623 from $1.1636.

Analysts said the dollar has strengthened partly because the US is seen as facing less direct risk from the conflict than other countries.

Published on
02/03/2026 – 10:23 GMT+1

European markets cratered on Monday as the fallout from a dramatic weekend of US and Israeli strikes on Iran rattled investors across the continent.

ADVERTISEMENT

ADVERTISEMENT

The Euro Stoxx 50 shed 2% at the open, with the broader pan-European Stoxx 600 close behind at -1.8% — and the selling shows no signs of stopping.

Regional indices from Frankfurt to Paris to Milan are all in the red, spooked by an escalating conflict that has choked shipping traffic through the Strait of Hormuz and drawn Hezbollah into the fray on Sunday.

In London, the FTSE 100 is having the more durable response, only falling around 0.3%.

However, Germany’s DAX 30 edged down 1% whilst France’s CAC 40 dropped more than 1.4%.

Italy’s FTSE MIB fell roughly 1.8%, the Netherlands’ NL 25 declined over 1% and Spain’s IBEX 35 has seen a sharp drop of more than 2%.

Before European markets opened, Japan’s Nikkei 225 was already in free fall and is currently down over 2.3%.

Likewise, US futures opened lower on Sunday with the E-mini S&P 500 dropping over 1.6% and E-mini NASDAQ down more than 2%.

In the UAE, regulators have taken the dramatic step of shutting down both the Abu Dhabi Securities Exchange and the Dubai Financial Market for the next two days.

The Capital Market Authority made no attempt to dress it up and the closures are explicitly designed to prevent panic selling after a staggering 165 ballistic missiles, 541 drones, and 2 cruise missiles rained down on the country over just 48 hours.

Oil and precious metals

While global markets sink into negative territory, crude oil prices rose in early trade on Monday morning as investors continue to weigh the potential impact of escalating tensions in the Middle East on the supply of energy.

The price of a barrel of US benchmark crude initially surged by about 8%. It later traded 5.9% higher at $71.00 per barrel. Brent crude rose 6.2% to $77.38 per barrel.

Gold is up roughly 2.5% while silver climbed 2% and platinum 1.2% as well.

Published on
09/02/2026 – 16:48 GMT+1

The French central bank governor handed in his resignation on Monday, which will take effect in June 2026.

This unexpected departure occurs roughly 18 months before his second term was scheduled to conclude in October 2027.

The move strategically shifts the responsibility of selecting his successor to the current President of France, Emmanuel Macron.

If Villeroy de Galhau had completed his full tenure, the appointment of the next head of the Bank of France would have fallen to the winner of the April 2027 presidential election, which current polling suggests could favour a far-right candidate.

While the French central bank governor cited personal reasons for his departure, specifically to lead the Fondation Apprentis d’Auteuil, a charity for vulnerable youth, the timing is perceived as a calculated effort to safeguard the institution’s future leadership.

In a press release, Villeroy de Galhau reassured that “a bit more than a year before the conclusion of my second term, it seems to me that I would have accomplished the core of my mission”.

In a separate letter to Bank of France employees, the governor also acknowledged that “this decision may come as a surprise”.

Resignation after stabilisation

Villeroy de Galhau may also have carefully chosen the right moment of stability in the present.

After a long and intense legislative deadlock in France, that saw the collapse of multiple governments, Prime Minister Sébastien Lecornu successfully navigated the approval of the 2026 budget which was announced at the start of the month.

Throughout late 2025, France’s inability to pass a budget had rattled investors, pushing the risk premium on French debt to its highest levels in years.

By waiting until this budget was finalised, Villeroy de Galhau ensured his departure did not trigger fresh market panic or exacerbate the existing political crisis.

President Emmanuel Macron can now focus on appointing a successor who will likely align with his pro-European and centrist economic vision.