# Calm returns to markets in Europe but oil prices climb higher on Iran war

By Emma Wall — 2026-03-04

Emma Wall, chief investment strategist at Hargreaves Lansdown, said: “Escalating conflict in the Middle East saw market losses across the globe yesterday – and early trading suggests a mixed picture today.

“Oil prices reached just shy of $85 a barrel yesterday as trade through the Strait of Hormuz – through which 20 per cent of global flow moves daily – halted entirely.

“Gas prices also rose sharply. Iraq announced plans to pause production due to the disruption.

“Equity and bond markets priced in the impact of a potential supply shock, anticipated to hike energy costs, stoke inflation and force higher interest rate policy.

“Gold fell four per cent as higher Treasury yields offered haven seekers an alternative home.

“Europe felt the brunt of investor concern, with Germany’s DAX down 3.44 per cent, France’s CAC 40 falling 3.46 per cent and the FTSE 100 fell 2.75 per cent.

“The US began trading with similar negativity but markets were granted reprieve in the form of President Donald Trump who pledged insurance guarantees and escorts for tankers using Hormuz.

“The S&P 500 therefore closed down a more muted 0.94 per cent and NASDAQ index fell just 1.02 per cent. The brent crude oil price fell back to $80 on the news.

“Today’s trading in Asia has not picked up the optimistic baton – with markets down across the region.

“Japan’s Nikkei is down 3.73 per cent at the time of writing, while China’s Shanghai Composite is down 1.29 per cent and Hong Kong’s Hang Seng has fallen 2.78 per cent.

“South Korea’s KOSPI index is in technical correction territory, down 12 per cent.

“Losses are driven by AI-names in a reversal of market trends that have dominated in recent years, and US dollar strength has also weighed.

“But futures for Europe suggest a more robust open – the FTSE 100 is currently on track to open flat, and futures for France, Italy and Germany are edging into positive territory.

“The old-economy nature of the region, a headwind in recent years, is proving a boon.

“This underlines the importance of portfolio diversification in times of market stress.”

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