(Zonebourse.com) – Like all European markets, Paris starts the week in a very bad mood, as the conflict in the Middle East, laden with threats to the global economy, shows no signs of easing, quite the opposite. Shortly before noon, the CAC 40 is down by about 2%, around 7,516 points, while the pan-European STOXX Europe 50 index drops 2.2%, just like the DAX in Frankfurt, and the FTSE in London is down by 2.3%.
As the war enters its fourth week, the latest news is hardly encouraging, with Donald Trump threatening Iran with strikes on its electrical infrastructure if the Strait of Hormuz is not reopened within two days.
Tehran, for its part, escalated the situation over the weekend by targeting the American-British base of Diego Garcia, located in the heart of the Indian Ocean, and by firing a missile at the Israeli city of Dimona, near a nuclear reactor.
An alarming escalation of the conflict for the economy and markets
The escalation of the American-Iranian conflict increases the risk of prolonged disruptions in energy supply, which could fuel inflationary tensions and penalize economic activity globally.
“While the war continues, American stocks should hold up better than European stocks,” said Christopher Dembik, investment strategy advisor at Pictet AM, adding that “for once, this is due to macroeconomic reasons.”
“As a net exporter of oil and gas, the United States only needs to manage the rise in pump prices, whereas Europe is facing the double problem of rising prices and energy shortages,” he stated.
However, the professional believes that in the long term, it is difficult to predict which countries and sectors will fare the best, and caution is advised regarding economic cost forecasts of the conflict.
“History shows that markets can recover quickly when geopolitical tensions ease,” added Mark Haefele, chief investment officer at UBS Global Wealth Management.
“Our fundamental advice remains the same, which is to stay strategically invested, but manage active risk by diversifying, hedging, and reducing excessive cyclical exposures,” he continued.
Oil benefits Technip Energies and weighs down Air France-KLM
Currently, high oil prices ($99 per barrel on WTI, $113 per barrel on Brent) are enabling Technip Energies (up 3.1%) to lead the Paris SBF 120, while causing Air France-KLM (down 5.5%) to suffer, among the biggest declines in the index.
Elsewhere in Europe, Poste Italiane slumps by 9.7% in Milan after launching a bid for Telecom Italia, which is up by 2.4%. The operation, structured in cash and stock exchange, values the former telecom monopoly at 10.8 billion euros.
Pandora (up 9.6%) advances in Copenhagen and tops the STOXX Europe 600, despite a note from RBC lowering the target from 600 DKK to 575 DKK. The Danish jeweler benefits from the drop in silver and gold (-5%), reducing its production costs.
In terms of statistics, no major macroeconomic data is expected in Europe on Monday, but the week will see the release of preliminary PMI indices, as well as business climate indices in Germany and France.
Copyright (c) 2026 Zonebourse.com – All rights reserved.
source : AOF
