Market Overview
As trading commenced on March 2, 2026, European stock markets opened lower, reflecting heightened geopolitical concerns. The CAC 40 in Paris fell by 2.10%, settling at 8,400.60 points by 08:08 GMT.
In Frankfurt, the DAX index decreased by 2.22%, while London's FTSE 100 saw a decline of 0.66%. The EuroStoxx 50 dropped by 2.37%, the FTSEurofirst 300 fell by 1.64%, and the Stoxx 600 index retreated by 1.65%.
Geopolitical Developments
Investor focus remains sharply on the evolving geopolitical landscape. The Israeli military announced extensive airstrikes targeting locations in Tehran, following retaliatory actions from Iran in response to a joint operation initiated by the United States and Israel.
Additionally, the Israel Defense Forces (IDF) reported that they have begun striking Hezbollah positions across Lebanon, responding to missile attacks directed at Israel from the Iranian-backed group, which raises concerns about a potential new front in the conflict.
The U.S. President indicated in an interview with the Daily Mail that the conflict could extend for another four weeks, asserting that military operations would continue until American objectives are achieved.
Economic Indicators and Sector Performance
Amid these geopolitical risks, investors are also awaiting the release of manufacturing PMI indices. In Germany, retail sales experienced a month-on-month decline of 0.9% in January, a sharper drop than anticipated, according to data from the Federal Statistical Office.
In the equity markets, the defense sector is benefiting from the renewed tensions, with companies such as Thales, Dassault Aviation, and Exosens seeing gains between 3% and 6%. In Germany, Rheinmetall and Renk recorded increases of 3.6% and 5.4%, respectively, contributing to a 1.3% rise in the sector index.
Energy stocks are also performing well, buoyed by rising oil prices. TotalEnergies, Shell, and Viridien have gained between 5% and 6%, while the energy sector overall has advanced by 2.5%.
Conversely, airline stocks are facing significant pressure. Air France-KLM, Lufthansa, and International Airlines Group (IAG) have seen declines ranging from 7% to 10%, with the airline sector index dropping by 5.5%, amid concerns that regional tensions could disrupt traffic and increase fuel costs.
