Europe Rebounds as Middle East Risk Premium Builds
European equities opened higher on Wednesday (March 4) after Tuesday’s sharp selloff as investors continued to track the escalating conflict in the Middle East. The regional Stoxx 600 rose 0.6% shortly after the opening bell. London’s FTSE 100 was up 0.1%, while Germany’s DAX and France’s CAC 40 gained about 0.5% each.
The early rebound comes against a still-fragile risk backdrop. Markets were hit hard in the prior session as the war weighed on global sentiment, with banking, insurance, travel and leisure, and utilities leading losses—sectors that tend to be sensitive to growth expectations, funding costs, and shifts in risk appetite.
Spain stood out for different reasons. The IBEX 35 hovered near flat after U.S. President Donald Trump threatened to cut off all trade with the country, following Madrid’s decision not to allow U.S. forces to use Spanish bases for strikes on Iran. The headline added a policy-risk layer on top of the broader geopolitical premium already embedded across European assets.
Overnight, U.S. and Israeli attacks on Iran continued, while Western countries sought to organize evacuation flights for citizens in the region. For markets, the main transmission channel remains energy and rates: any sustained rise in oil and gas prices can revive inflation concerns and complicate the rate outlook, a mix that typically caps equity upside even when short-covering lifts indexes at the open.
Investors will keep monitoring developments on the ground, energy-price moves, and any escalation into broader trade or diplomatic measures—particularly as these factors can quickly reshape risk appetite across European equities.
Source : Newsmaker.id
