European stocks plunge as U.S.-Iran peace talks collapse

European stock markets experienced a significant downturn Wednesday, triggered by U.S. President Donald Trump's declaration that negotiations with Iran had concluded. The escalating tensions in the Middle East also sent oil prices soaring by nearly 8%, raising concerns about potential extensions of recent attacks.

The Spanish IBEX 35 was the hardest-hit European index, shedding 2.73% and marking its worst session since March 3. The decline was attributed to the heightened tension in the Middle East and a specific threat from Trump to sever all trade with Spain, labeling it a "lost cause" and a "terrible ally" of NATO.

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Trump stated he will continue the war with Iran until we finish with their nuclear arsenal.

In Frankfurt, the DAX closed down 2.23%, its worst day since mid-March, with significant losses in real estate (-5.9%), aerospace and defense (-3.68%), and technology (-2.81%) sectors. Paris's CAC 40 fell 2.18%, extending a three-day losing streak, particularly impacted by industrial, financial, and defense stocks. London saw a 1.66% drop, while Milan lost 1.22%, showing the least impact among the major European markets.

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the markets were discounting the end of the conflict and this situation brings us back to a scenario very similar to the beginning of the conflict in February, although with a potential impact of lesser intensity, because the element of surprise is less.

Analysts suggest markets had anticipated a resolution to the conflict, and this development returns the situation to a scenario similar to the conflict's February start, albeit with potentially less surprise. "Trump stated he will continue the war with Iran until we finish with their nuclear arsenal," noted analyst Manuel Pinto of XTB. He added that net energy-importing countries, such as Europe and parts of Asia, are particularly vulnerable to this price surge.

Across the Atlantic, Wall Street, which had opened lower, deepened its losses. The Dow Jones Industrial Average fell 1.6%, the Nasdaq 1.11%, and the S&P 500 declined 0.88%. Asian markets also suffered, with Hong Kong's Hang Seng being a notable exception, gaining 2.99%. The South Korean Kospi dropped 5.35%, Japan's Nikkei fell 2.11%, and China's CSI 300 and Shanghai Composite saw declines of 0.77% and 0.49%, respectively.

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the great victims are the net energy importing countries (like Europe and part of Asia), which suffer severe punishment.