European Stocks Fall on Iran War Concerns; Rheinmetall Plunges

European stocks declined in March 2026 amid escalating Iran war tensions, surging oil prices, and fears of potential ECB interest rate hikes, extending losses for the fifth time in six trading sessions. The Stoxx Europe 600 index closed 0.6% lower, reflecting broad market unease as geopolitical risks and economic policy uncertainty weighed on investor sentiment across the region. German defense contractor Rheinmetall led the downturn, plunging 8%—its steepest drop since 2022—after warning that 2026 sales would miss analyst forecasts, surprising markets reliant on defense sector growth. Higher oil prices, driven by Middle East instability, exacerbated inflation concerns, compounding fears that the European Central Bank may delay or reverse monetary easing plans. The selloff underscored how geopolitical shocks and corporate earnings disappointments are disrupting Europe’s fragile economic recovery, with defense stocks particularly vulnerable to shifting conflict dynamics.