By Joe Stonor
Blue-chip European stock indexes had their worst day in months as consumer-sensitive stocks bore the brunt of investor fear over the escalating conflict in the Middle East.
Airlines, hotel groups and luxury goods makers all tumbled as the conflict between the U.S. and Iran shuttered airports and sent oil prices higher. The Europe-wide Stoxx 600 index fell 1.65%, its worst day since Aug. 1 last year.
Germany's blue-chip DAX index--down 2.6%--suffered its worst session since "Liberation Day"-fueled selling last April, with auto stocks BMW and Volkswagen tumbling 4% and 5%, respectively.
A basket of luxury stocks was down 4.35%, with sector bellwether LVMH falling 4.3%. The Luis Vuitton and Christian Dior owner is the largest stock in France's CAC 40 index, and its fall helped push the index down 2.2%.
Energy-intensive stocks like automakers and chemicals fell, while banks also sold off--a gauge of European bank stocks closed 3.3% lower.
The market reaction Monday was "a playbook response to geopolitical conflicts," Citi analyst Beata Manthey said.
"In these time you want to own energy, defensive stocks and potentially defense stocks, and you want to stay away from sectors that are energy-intensive."
London's FTSE 100 fell too--closing down 1.2%--though its slip was less severe than that of its European peers. It was boosted by gains for oil supermajors Shell and BP, and by a surge in arms company BAE Systems, which rose 6.1%.
"The FTSE 100 has a positive triple-whammy," Manthey said, citing the index's tilt toward miners, defense stocks and companies that are less sensitive to macroeconomic swings. "It is the best geopolitical hedge that you can find around the world."
Citi upgraded its view on the U.K. to overweight from underweight.
If the conflict in the Middle East escalates further, European stocks outside of the U.K. are vulnerable because of their outsized dependence on oil and gas, Manthey added.
Write to Joe Stonor at josephmichael.stonor@wsj.com
(END) Dow Jones Newswires
March 02, 2026 13:23 ET (18:23 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
