European Markets Rattled by Middle East Turmoil

European markets experienced a downturn on Monday as heightened military conflict in the Middle East showed no signs of abating. Energy and defense sectors, however, saw notable gains amidst the turmoil.

The pan-European STOXX 600 index saw a significant drop of 1.8%, closing at its lowest point since mid-February. The decline followed a series of retaliatory Iranian attacks that affected shipping routes, leading to a 13% spike in oil prices. Energy giants such as Shell, BP, and TotalEnergies experienced a rise of over 5%.

The geopolitical tensions escalated following U.S. and Israeli strikes that resulted in the death of Iran's Supreme Leader Ayatollah Ali Khamenei. Subsequent missile launches by Tehran spurred fears of broader regional involvement. This impacted travel and leisure stocks heavily, with Lufthansa witnessing an 11% decrease after extending flight suspensions. Conversely, defense stocks such as BAE Systems and Rheinmetall benefited, gaining between 5% and 8%.