After US markets hit record highs in late February, the mood suddenly changed. The US administration's decision to impose a 10% tariff, raised to 15% in early March, delivered an initial confidence shock to markets. Soon after the outbreak of a direct conflict involving the United States and Iran, the sell-off intensified.
Performance recap
The period was marked by an uninterrupted slide in equity indices, to the benefit of safe-haven assets.
S&P 500 (-4.9%): the global benchmark was the index hit hardest by uncertainty over the tariffs imposed by President Trump. The release of disappointing US jobs figures on March 6 only deepened mistrust.
CAC 40 (-5.2%): the French index, heavily exposed to luxury, sank on fears of a slowdown in global consumption. Paris was narrowly spared a deeper drop by stocks such as TotalEnergies and Thales, which limited losses thanks to surging oil prices and rising defence budgets.
Nasdaq 100 (-4.3%): the US tech gauge held up better than its neighbour, the S&P 500. Artificial intelligence acted as a buffer and is still seen as an attractive investment, regardless of the oil price.
DAX 40 (-6.4%): Germany posted the worst performance in this ranking. German industry was directly hit by soaring energy costs following tensions in the Middle East.
Nikkei 225 (-1.7%): Japan set the pace. Supported by a monetary policy that is finally clear and a weaker yen that benefits exporters, Tokyo absorbed the shock better than Western markets.
FTSE 100 (-1.2%): the UK came top of the class. The index is among the most stable right now thanks to its heavy weighting in oil majors (Shell, BP) and miners that benefit directly from the sharp rise in commodity prices.
The biggest losers
In Germany, the DAX40 has been dragged down by heavy industry, with giants such as BASF and Volkswagen seeing margins squeezed by higher energy prices. While AI is supporting the Nasdaq, the hardware segment is being hit by the Middle East conflict. The new tariffs are fuelling fears of a break in supply chains. Household purchasing power is directly affected by inflation, which threatens to pick up again. Luxury and home-furnishings stocks are being shunned in favour of savings.
On the winners' side
With oil flirting with $120 a barrel, major producers such as TotalEnergies and ExxonMobil are generating significant cash flow. The conflict involving the United States has also allowed defence manufacturers to fill their order books. Lockheed Martin, Leonardo and Thales have seen valuations surge. The sector is no longer truly cyclical; it is becoming structural in a world that is rearming.
VIX update
The fear gauge moved from a normal area around 15 points in February to a stress peak nearing 38 points this Monday, 9 March. The rise signals major banking and/or geopolitical panic, pushing investors into defensive assets. The Middle East conflict, combined with lingering doubts about the Fed's ability to cut rates if inflation returns because of rising oil prices nearing $120, is adding to the tension. Note that the VIX does not predict market direction, but indicates the intensity of emotion. Today, fear of the unknown is dominant.
This Monday's session, of March 9, marks an important turning point. The VIX is edging towards 40 points and European indices are still falling at the open. Preserving capital is now taking precedence over the search for returns.
