Fear of escalation sinks EU stock exchanges, Milan (-3.9%) and Madrid (-4.5%) the worst

(Il Sole 24 Ore Radiocor) - The thought of an escalation of the war in Iran sank European stock exchanges for the second consecutive session. Added to this is the uncertainty as to how long the conflict will last: first US President Donald Trump stressed the possibility of fighting wars "forever" thanks to the availability of US weapons, then he declared that Iran was running out of essential armaments and that he would be willing to talk with some surviving members of the regime in power in the country.

The complexity of the geopolitical picture weighs on the stock markets, but pushes up oil and gas prices once again. Milan and Madrid thus posted the biggest losses on the Old Continent, with the Ftse Mib dropping 3.92% and "burning" 35.5 billion, while the Ibex dropped 4.55%. The Paris Cac (-3.46%), Frankfurt's Dax (-3.44%), Amsterdam's Aex (-2.55%) and London's Ftse 100 (-2.75%) were also in the red.

On Wall Street, the Dow Jones closed down -0.83%, at 48,501.27 points, the S&P500 gave up 0.99% to 6,813.63 points, the Nasdaq lost 1.02% to 22,516.69 points, with traders beginning to fear that the conflict between the US and Iran could drag on longer than expected. The commander of Iran's Revolutionary Guard declared that the Strait of Hormuz, the world's most important transit route for crude oil, is closed and that Iran will set fire to ships attempting to cross it. Other signs of a worsening conflict became apparent as the fourth day entered: the US embassy in Riyadh, the capital of Saudi Arabia, was hit by drones as Iran intensified its attacks against the country. Concerns are growing over how long Gulf states, such as the UAE, can withstand the bombardment of Iranian missiles and drones with their air defences. President Donald Trump has warned that the conflict could continue for more than four weeks

Defence stocks also failed to save themselves in Piazza Affari, with Leonardo (-0.48%) falling despite a price target hike by Citi analysts. Oil stocks were also hit by declines, with Eni down -1.62% and Tenaris down -1.89%. But the worst loser was Saipem (-5.16%): the group's strong exposure to the Middle East weighed on the stock. The insurance sector also suffered (Unipol -5.18%) in the wake of the thud of Zurich Insurance Group (-6.6% on the Zurich Stock Exchange) after the maxi-capital increase for the Beazley dossier. Sales on utilities with Italgas (-6.3%) and Hera (-5.7%) at the bottom along with luxury goods (Moncler -6.47% and Cucinelli -5.57%). Lottomatica (+3.32%) bucked the trend, rising after the publication of the 2025 accounts. Recordati (+1.35%) also saved itself, with the rest of the list in "red"

Energy prices are still rising as the escalation in the Middle East continues to foreshadow a stop-supply scenario. Market eyes focused on the Strait of Hormuz, through which 20% to 30% of the world's oil and gas supply transits. Brent crude trades at $83.6 per barrel (+7.6%), and Wti at $76.8 (+8%). Ttf gas still soared in Amsterdam after the halt in production of Qatari LNG, following damage caused by Iranian drones to a plant, and fears of new disruptions along strategic routes: +20.4% to EUR 53.6 per megawatt hour.