Luxury stocks were among the hardest hit sectors early Tuesday, with European markets heading for another day of losses as the conflict in the Middle East intensified overnight.

Shares of conglomerate LVMH, Gucci-owner Kering, and British outerwear maker Burberry were among the worst performers, with week-to-date losses approaching 10% each. The wider European blue-chip index, Stoxx 600, was down nearly 3% Tuesday, after falling 1.6% on Monday.

The Middle East has been a driver of growth in the sector, which is battling a difficult macroeconomic backdrop, and many formerly best-selling brands are struggling to resonate with consumers.

The region’s strength, however, hasn’t been enough to offset weakness elsewhere, notably in China, and industry giants like LVMH and Kering are still struggling to get sales back on a positive track.

“The Middle East has been one of the few bright spots,” Morningstar analyst Jelena Sokolova told CNBC. “You have one area which was small, but which was very, very vibrant, and it’s being affected now.”

The U.S. and Israel launched widespread attacks on Iran over the weekend that killed the country’s Supreme Leader Ayatollah Ali Khamenei. Iran responded with retaliatory strikes, and the conflict now engulfs the wider Middle East region with no clear endpoint in sight.

U.S. President Donald Trump has said the war could last for four to five weeks, but that it could go on “far longer than that.”

Shares of Richemont, the owner of Cartier, Van Cleef, and Chloé, fell heavily on Monday and Tuesday, with a relatively big exposure to the region. 

But even with Middle East revenue exposure on average in the mid- to-high single digits for luxury brands, repercussions could spread if a conflict lasts for weeks or even months.

“If people don’t go back to normal, and we have more issues when it comes to sourcing oil and gas from the Gulf, then the probability of a recession globally could be increasing, and that would definitely dampen discretionary sectors like luxury,” Bernstein analyst Luca Solca told CNBC. 

If the war carries on for another six months, during which oil is significantly disrupted, “then this is very bad news,” he added. 

Luxury stocks come under pressure during times of heighted geopolitical and economic uncertainty because demand typically requires a “feel-good” backdrop and supportive consumer confidence, analysts say.

“Luxury demand relies on positive consumer confidence and constructive outlook of one’s future prospects, as well as the consumer experience which is often less transactional and more emotional,” RBC Capital Markets analysts wrote in a note to clients on Monday. “Conflict, shock, uncertainty and fear are not helpful in this context and can have a shortterm impact on luxury demand.” 

The impact on asset prices overall remains to be seen, but moves so far indicate that a hit, at least in the short term, is to be expected. 

There are massive uncertainties about a potential end to the conflict and when that would be, said Sokolova, however, also calling the market reaction “exaggerated” given the relatively small sales portion coming from the region. 

Strikes between the U.S., Israel and Iran in the region have forced airlines to cancel thousands of flights. While some airlines said Monday they would resume a “limited number” of flights, aircraft remain largely grounded as the conflict enters its fourth day. 

The timing of the strikes also coincides with Ramadan, meaning that post-Ramadan travel may be disrupted if the conflict drags on. Travel from the Middle East after the month-long observance is predominantly to Europe, RBC said. 

“Given the timing of the Iran War conflict, and the current grounding of commercial flights, there may be a reluctance for Middle East consumers to travel post Ramadan in 2026 which would likely negatively impact a portion of luxury consumption in Europe.”