European stocks retreated sharply Tuesday as the ongoing conflict in the Middle East weighed heavily on global sentiment.
At 03:05 ET (08:05 GMT), the DAX index in Germany dropped 1.9%, the CAC 40 in France slipped 1.2% and the FTSE 100 in the U.K. fell 1%.
Subscribe to InvestingPro for more stock market analysis Conflict in the Middle East widens European equities have continued to fall as the conflict between the U.S. and Iran, started over the weekend, has threatened to engulf the whole Gulf region.
Reports indicated that the U.S. embassy in Riyadh has come under attack from missile strikes, as have Amazon data centers in the UAE and Bahrain, as Iran retaliated by launching strikes across several Middle Eastern countries.
This has called the safe-haven status of Gulf cities like Dubai into question like never before.
Additionally, Israel said that it was simultaneously targeting Iran and Lebanon, after Tehran-backed Hezbollah militant group attacked Tel Aviv with missiles and drones.
The U.S. State Department said on Tuesday it has ordered the departure of non-emergency U.S. government personnel and family members from Bahrain, Iraq and Jordan.
U.S. President Donald Trump stated overnight that the U.S. will do "whatever it takes" to achieve its military objectives, suggesting that the operations could last several weeks.
Corporate earnings continue There are more corporate earnings for European investors to digest, even with the majority of the focus remaining on the geopolitical situation.
Thales (EPA:TCFP) reported fourth-quarter results that exceeded analyst expectations, with the French defence and aerospace group helped by a strong performance in its Aerospace and Defence segments, while its Cyber & Digital business remained soft.
SIG Group (SIX:SIGNC) reported a loss for 2025 after the Swiss packaging company booked €350.7 million in non-recurring charges tied to a strategic review, while revenue was broadly stable in a soft market.
Kuehne & Nagel (SIX:KNIN) reported a 24.8% drop in annual profit for 2025 as currency pressures and weaker margins hit results, with the Swiss logistics company’s equity ratio falling to 18.5% from 27.8% a year earlier.
Lottomatica (BIT:LTMC) beat full-year 2025 expectations with 21% profit growth, as the Italian gaming operator continued to gain online market share.
Eurozone inflation data due The Eurozone flash consumer inflation number for February is due later in the session, and will be of particular interest as energy prices continue to rise.
The annual figure is expected at 1.7%, the same level as was seen in January, while the equivalent core number, which excludes volatile food and energy components, is seen at 2.2% year-on-year.
Crude prices surge higher Oil prices continued to surge, adding to the previous session’s sharp gains, as threats to flows through the Strait of Hormuz continued to underpin supply disruption worries.
Brent futures soared 4.3% to $81.10 a barrel and U.S. West Texas Intermediate crude futures rose 4% to $74.05 a barrel.
Both contracts closed more than 7% higher after climbing as much as 13% to one-year highs on Monday.
Tensions have intensified after Iranian officials vowed to attack any ship attempting to pass through the Strait of Hormuz, raising the prospect of disruption to crude flows from the major Gulf producers.
