Iran war pushes EU stocks to biggest two-day drop since April

European stocks are aiming for their biggest two-day drop since April amid escalating conflict in the Middle East, which has triggered a rise in energy prices, Bloomberg writes.

Pan-European stock index Stoxx Europe 600 at the beginning of trading on March 3 fell by almost 2.6%. The decline was broad-based - the decline was recorded in all sectors, notes Bloomberg. Among the outsiders was the insurance segment: shares of Zurich Insurance Group fell by 5%. At the same time, the basket of European oil companies, formed by Goldman Sachs, grew by 0.5%, outperforming the market as a whole on the background of rising oil prices, the agency reports.

Meanwhile, the UK's main stock index FTSE 100 fell by 2.3%. France's CAC 40 lost 2.2% and Germany's DAX lost almost 3%.

Such dynamics of the key European index showed on the background of statements by U.S. President Donald Trump about the readiness to do "everything necessary to achieve U.S. goals in Iran," while the U.S. authorities refuse to indicate specific terms for the end of the conflict, Bloomberg notes.

In the center of attention remains the possible impact on the markets of the restriction of navigation in the Strait of Hormuz off the coast of Iran, through which passes about a fifth of the world's marine supplies of oil and liquefied natural gas. This increases fears of further rise in energy prices, the agency writes.

Investors no longer perceive what is happening as mere geopolitical noise - the probability of disruptions in oil and gas supplies is built into quotations, says Matthieu Rasche, head of equity strategy at Julius Baer. "The market-assessed probability of at least temporary disruptions has increased markedly. A sustained rise in oil and LNG prices would tighten financial conditions, squeeze corporate margins and, crucially, revive fears of stagflation," said Raschet.

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