The German stock market’s benchmark DAX dropped to a three-month low on Tuesday morning as investors persisted in withdrawing from counters, driven by a declining risk appetite amid rising tensions in the Middle East. Growing worries regarding inflation, alongside U.S. President Donald Trump’s remarks that the conflict might endure for approximately four to five weeks, and that the U.S. possesses the “capability to go far longer than that,” heavily influence sentiment.

In an interview, Philip Lane has cautioned that a prolonged conflict in the Middle East, coupled with a continued decline in oil and gas supplies from the region, could lead to a “substantial spike” in inflation and a “sharp drop in output” in the euro zone. The DAX experienced a decline of 909.68 points, representing a 3.69% drop, bringing it to 23,762.72 recently. Beiersdorf, the largest decliner in the benchmark index, has seen a decline of up to 17%. The stock has declined after the company indicated a weaker outlook for 2026, attributing this to cost and foreign exchange pressures.

Siemens Energy, Infineon Technologies, Deutsche Bank, Bayer, Allianz, BASF, Vonovia, Continental, and Commerzbank have experienced declines ranging from 4% to 6%. Daimler Truck Holding, RWE, Deutsche Post, Munich RE, Brenntag, Hannover Rueck, Heidelberg Materials, Volkswagen, Henkel, Fresenius, E.ON, Symrise, BMW, SAP, Mercedes-Benz, Adidas, Gea Group, Merck, and Porsche Automobil Holding are experiencing declines of 2% to 4%.

In a departure from the prevailing trend, Fresenius Medical Care and Deutsche Boerse have experienced upward movement, with gains of 1.1% and 2.7%, respectively. In economic news, data indicated that the annual inflation in the Euro Area increased to 1.9% in February 2026, rising from January’s 16-month low of 1.7% and surpassing market expectations of 1.7%, according to a preliminary estimate. Among the bloc’s largest economies, the Harmonised Index of Consumer Prices saw an acceleration in France (1.1% from 0.4%), Spain (2.5% from 2.4%), and Italy (1.6% from 1.0%), while experiencing a slight easing in Germany (2.0% from 2.1%).