I just saw that European stocks dropped quite sharply today, with the German DAX index plunging amid escalating geopolitical tensions, briefly falling below 24,650 points, and ultimately closing around 24,855 points, down nearly 1.8%. This stocks tumble is mainly driven by concerns over the Middle East situation, with the US and Israel conducting joint strikes on Iran, followed by Iran's retaliatory actions. This tense situation has led investors to reassess economic prospects.

The most immediate impact is a surge in energy prices. Brent crude oil prices soared over 10%, hitting a new high since January 2025, as markets worry that Middle Eastern supply disruptions will intensify inflationary pressures. Once this news broke, tourism, leisure, and banking sectors were hit hardest, with individual stocks generally falling between 2% and 4%.

Looking at specific stock performances, Deutsche Bank and Commerzbank fell by 4.2% and 3.7%, respectively, the largest declines. Auto and industrial stocks also didn't fare well, with Continental, Daimler Trucks, Siemens, Zaland, BMW, and Volkswagen all dropping between 3% and 3.5%. Other blue-chip stocks like Porsche Automobil Holding, HeidelbergCement, Henkel, Siemens Energy, MTU Aero Engines, Deutsche Post, Allianz, Infineon, Mercedes-Benz, and Adidas also declined by 2% to 3%.

Interestingly, defense stocks Rheinmetall rose nearly 2% against the trend, indicating some market differentiation in pricing geopolitical risks. Additionally, RWE and Deutsche Bank increased by 0.75% and 1.4%, respectively, making them among the few resilient stocks.

From economic data, Germany’s retail sales in January decreased by 0.9% month-on-month, which was unexpected as the market had expected it to stay flat. Year-over-year growth slowed from 2.5% in December to 1.2%, and weak consumer spending has heightened concerns about the economic outlook. On the bright side, manufacturing PMI showed some signs of recovery, rising from 49.1 in January to 50.9 in February, though still near the contraction threshold, at least indicating some revival. However, all these data points may have been overshadowed by fears of geopolitical risks. Overall, the stocks tumble reflects the market’s layered concerns over multiple risks.