European Stock Markets Close Lower as Iran Conflict Stokes Inflation Fears

European stock markets closed lower on Friday, March 13, 2026, marking a second consecutive week of losses as the escalating conflict in Iran stoked fears about higher inflation and slower growth. The Milan FTSE MIB closed down 0.31%, weighed down by declines in Stellantis, Fincantieri, and Prysmian. Paris's CAC 40 fell 0.91%, while London's FTSE 100 dropped 0.43%. The German DAX also posted a clear loss, remaining under pressure from the Iran conflict. Oil prices moved back above $100 a barrel, as traders reduced risk exposure ahead of the weekend, according to Reuters.

The Iran conflict, which had lasted approximately 10 days as of March 13, served as the dominant driver of market sentiment across the continent. Rising oil prices amplified inflation concerns, pushing investors toward caution. Wall Street also showed weakness, with the Dow Jones Industrial Average falling 0.26% and the S&P 500 declining 0.61%, contributing to weekly losses across major U.S. indices as well. European shares extended their declines through the session, with the pan-European Stoxx index ending the week lower for the second time in a row, according to Reuters. The combination of geopolitical risk and energy price pressure left few sectors unaffected.

In Milan, the automotive and industrial sectors bore a notable share of the selling pressure. Stellantis, the multinational automotive manufacturer formed through the 2021 merger of PSA Group and Fiat Chrysler Automobiles, was among the worst performers on the FTSE MIB. Fincantieri, the Trieste-based shipbuilding company and Europe's largest shipbuilder, also weighed on the index, as did Prysmian, the Milan-headquartered cable manufacturer specializing in energy and telecom sectors. The Frankfurt session mirrored the broader European trend, with the DAX described by N-tv as remaining "in the Iran wake" following another clear daily loss. No major European index managed to close in positive territory on the day.

European equity markets had already recorded losses in the prior week before the Iran conflict intensified. The return of oil prices above $100 a barrel recalled periods of energy-driven inflation that weighed on growth across the eurozone in previous years. The Iran situation, which had developed over roughly 10 days by March 13, 2026, added a geopolitical dimension to existing concerns about inflation and monetary policy. Wall Street's concurrent weakness underscored the global nature of the risk-off sentiment, with the Dow Jones, S&P 500, and Nasdaq all posting weekly losses, according to web search results.

The session illustrated how closely European markets tracked both energy prices and geopolitical developments in the Middle East. With oil above $100 a barrel and no resolution to the Iran conflict in sight as of March 13, traders moved to reduce exposure before the weekend. The second consecutive weekly loss for European indices reflected a sustained shift in investor sentiment rather than a single-session reaction. Milan's relative resilience compared to Paris — down 0.31% versus 0.91% — offered limited comfort given the breadth of declines across the continent. Market participants will be watching developments in Iran closely in the coming days for any sign of de-escalation that could ease energy price pressure.