LONDON — Wall Street and European stocks fell Thursday as the conflict involving the United States, Israel and Iran intensified, lifting oil prices and stoking fears of a broader inflation shock, March 5, 2026.
Investors sold equities and government bonds as Tehran vowed retaliation after warning the U.S. would “bitterly regret” the sinking of an Iranian warship in the Indian Ocean. The fighting entered its sixth day with no clear sign of de-escalation, while concerns also grew over disruption in the Strait of Hormuz, a key shipping lane for crude oil and liquefied natural gas.
Oil prices rose sharply on fears that any prolonged closure or disruption in the waterway could tighten global energy supplies. Brent crude traded near $84 a barrel, while West Texas Intermediate hovered around $77. Brent had already climbed about 12% earlier in the week.
The jump in energy prices renewed worries that higher fuel and transport costs could feed into consumer prices worldwide, complicating efforts by central banks to keep inflation under control.
Borrowing costs also climbed across Europe, underscoring investor concern that a longer conflict could keep price pressures elevated. Germany’s 10-year bund yield rose 4 basis points to about 2.79%, while the U.K.’s 10-year gilt yield gained 7 basis points to move above 4.5%. Eurozone government bonds were on track for their steepest weekly sell-off in a year.
European Central Bank officials, including Vice President Luis de Guindos, as well as the governors of the German and Finnish central banks, warned that the inflation effect could remain limited if the conflict proves short-lived. They said the risks would grow if the war widens or drags on, potentially pushing inflation expectations higher.
Major stock indexes across Europe ended lower. Britain’s FTSE 100 fell 1.4%, Germany’s DAX dropped 1.6%, France’s CAC 40 lost 1.4%, and the STOXX 600 slipped 1.2%.
U.S. markets also declined, though technology shares held up better than other sectors. The Dow Jones Industrial Average fell 1.7%, the S&P 500 lost 0.8%, and the Nasdaq dropped 0.4%.
Investors are now looking to Friday’s U.S. monthly jobs report for a clearer read on the strength of the labor market and what it could mean for interest-rate expectations. For now, markets remain focused on whether the Iran conflict eases or expands, with oil, inflation, and global risk sentiment moving in tandem.