Stock market turbulence: Who loses billions and who profits

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Conflict in the Middle East is reshaping the balance of power in the stock market

Which companies have been hit the hardest

Airlines and the tourism industry — directly dependent on Middle East stability and fuel prices — have suffered the most severe blow. Airlines and travel companies have collectively lost more than $22 billion in market capitalization within just a few days. Mass flight cancellations and the closure of key hub airports such as Dubai, the world’s busiest international hub, have paralyzed global air traffic.

As a result, investor panic has spread across the travel sector. Shares of major airlines declined sharply. European tourism giant TUI lost about 10% of its value, while airline groups Lufthansa and IAG, the owner of British Airways, fell by more than 5%. In the United States, shares of Delta Air Lines, United Airlines, and American Airlines dropped 2–4%, despite their relatively limited direct exposure to Middle Eastern markets.

Asian carriers also came under pressure: Singapore Airlines, Cathay Pacific, Qantas, and Japan Airlines each fell by more than 4%. Analysts note that even with fuel hedging in place, airlines are facing rapidly rising fuel costs, longer routes to avoid restricted airspace, and a wave of cancellations — all of which are weighing on profitability.

The conflict’s negative impact has not been limited to carriers. The hotel and cruise industries have also started to lose ground as the outlook for global tourism deteriorates. In addition, the banking sector and cyclical consumer companies have been caught in a broader risk-off sell-off. In Europe, major stock indices fell 2–3% in a single day, with bank and automaker shares among the worst performers. Investors fear that rising energy prices will undermine consumer purchasing power and increase credit risks, prompting a reduction in exposure to economically sensitive sectors.

Who has been indirectly affected

Beyond direct business losses, the escalation has created systemic risks for countries heavily dependent on energy imports. Asian markets experienced the sharpest reaction: South Korea’s benchmark index plunged 7%, leading regional declines, while Japan’s Nikkei 225 dropped 3%. The sudden spike in oil prices immediately fueled concerns about inflation and slower growth in economies where energy stability is fundamental.

For energy-dependent Europe, the situation has been compounded by a gas shock. After Qatar preemptively halted LNG production due to the threat of strikes, European gas prices surged 25% in a single day. Against this backdrop, the pan-European Stoxx 600 and Germany’s DAX opened lower as investors continued to price in the risk of prolonged supply shortages. In effect, markets have been pushed back toward the realities of the 2022 energy crisis.

Investors are interpreting the conflict as an aggressive inflationary shock. As a result, even high-tech companies have come under pressure: rising inflation expectations push bond yields higher, making richly valued growth stocks less attractive to institutional investors.

Who is profiting from geopolitical turbulence

Despite widespread anxiety, the conflict has created a clear group of beneficiaries. The sharp jump in oil prices immediately lifted energy majors: European giants Shell and BP gained about 5%, while U.S. companies ExxonMobil and Chevron became trading favorites on expectations of windfall profits. Even Saudi Aramco added 3% to its market capitalization despite risks to domestic infrastructure, including the Ras Tanura terminal.

At the same time, defense stocks rallied strongly as investors priced in expectations of large-scale new orders. According to trading data, shares of U.S. defense giant Raytheon Technologies (RTX) rose 5.81% over the past several days, while Lockheed Martin gained 2.81%, approaching its annual highs. The European market also followed suit: UK-based BAE Systems advanced 3.40% despite the broader index decline. This dynamic confirms that capital is rapidly rotating into sectors associated with security and military capacity during periods of global instability.

Interestingly, the heavy weighting of energy and defense companies has made certain national indices more resilient than others. The UK’s FTSE 100 declined only 1%, significantly outperforming broader European benchmarks. A true paradox emerged in Israel: the Tel Aviv 35 index hit a record high, surging 5%, while the shekel strengthened by 1.5%. This reaction reflects local investor optimism, pricing in a scenario of a swift victory and a long-term reduction in geopolitical risks for the country.

Traditional safe-haven assets have not been immune, although their performance has been mixed. Gold — typically the primary refuge during wartime — displayed sharp volatility. After an initial surge on conflict headlines, March 3 trading saw a technical correction: the metal fell 2.4% to $5,193 per ounce. The pullback was driven by a stronger U.S. dollar and rising Treasury yields, as investors rotated capital into the appreciating American currency, putting pressure on precious metals.

Despite this, the broader trend of capital reallocation remains evident. Money is flowing out of risk-sensitive consumer sectors and into industries that ensure energy and defense stability. Even U.S. indices such as the S&P 500 and Nasdaq, despite sharp declines in late February, are currently attempting to stabilize. Over the past five days, both have remained marginally in positive territory (+0.65% and +0.23%, respectively), signaling cautious market expectations that the conflict may remain contained.

What traders should expect next

At present, most asset prices reflect a “temporary shock” scenario. The market appears to believe in a relatively short campaign, supported by statements from Donald Trump suggesting the operation could last at least four weeks. This view is reinforced by commodity market dynamics: front-month futures have risen sharply, while longer-dated contracts remain comparatively stable.

However, the risk of escalation remains critical. If the conflict drags on or draws in additional participants, such as Hezbollah or other Iranian allies, oil prices could exceed $100 per barrel. Such a scenario would trigger a new wave of global inflation, forcing central banks to maintain elevated interest rates for longer. In that case, the current rally in defense and energy stocks could give way to a broader market downturn as corporate profits and consumer purchasing power deteriorate.

For traders, key indicators in the coming weeks will include the status of the Strait of Hormuz, the integrity of oil infrastructure, and statements from OPEC+. The base-case scenario assumes the conflict will be contained within a month, followed by a recovery in air travel and a rebound in affected equities. However, a prolonged military campaign would inevitably transform the energy shock into a full-fledged economic crisis, making flexibility and risk hedging the only reliable strategies.

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