European stock markets declined across the board on Monday as rising military conflict in the Middle East spooked investors globally. Many indices, including Paris and Frankfurt, slipped more than two percent. Travel and leisure stocks fell the most, while energy and defense stocks jumped.
The pan-European STOXX 600 dropped 1.8% to its lowest since mid-February to 622.35 points, retreating from a record high hit on Friday, with most sectors traded sharply lower.
The United States and Israel continued their military strikes on Iran after weekend attacks that killed Iran’s Supreme Leader Ayatollah Ali Khamenei, prompting Tehran to launch missile barrages across the region.
Rising fears that the conflict could widen and potentially draw in neighboring countries weighed down on investors’ risk appetite globally. Asian markets also traded lower on Monday.
Energy stocks jump, Travel stocks slip
Energy stocks rallied, following a spike in crude oil prices, which surged as much as 13% after shipping in the crucial Strait of Hormuz was disrupted by retaliatory Iranian attacks. The energy index was 3.5% higher.
Shell, BP, and TotalEnergies shares rallied over 5% each
Travel and leisure stocks, which include airline and hotel companies, declined the most, down 4.4%. Lufthansa shares declined 11% after the German airline extended flight suspensions due to the situation in the Middle East.
Banking stocks declined 3.6%, while insurers fell 2%. On the flip side, the defense stocks such as BAE Systems, Rheinmetall, Saab and Leonardo all gained between 5% and 8%, Reuters reported.
Chinese stocks buck the trend
Chinese stocks closed at a 10-year high on Monday, bucking regional weakness, as mainland sentiment was supported by expectations that Beijing may step into steady markets ahead of a parliamentary meeting later this week. However, Hong Kong’s Hang Seng index fell more than 2% to a two-month low.
The Shanghai Composite Index ended the session up 0.5% at 4,182.6 points, the highest close since June, 2015. China’s blue-chip CSI300 Index gained 0.4%.
(With inputs from Reuters)
