European Stocks Drop as Concerns Over US Banks Intensify
European stocks declined on Friday as a sharp selloff in US regional lenders reverberated through global markets, amid growing bank credit concerns.
The Stoxx 600 fell 1.6% at the open, with Europe's banking index losing 2.8%, set for its biggest drop since August. Banco Santander SA, HSBC Holdings Plc and Deutsche Bank AG led losses, with all sectors in the red.
The US S&P Regional Banks Select Industry Index plunged 6.3% on Thursday, its worst drop since April's tariff-induced selloff after Zions Bancorp and Western Alliance Bancorp said they were the victims of fraud on loans to funds that invested in distressed commercial mortgages.“The market is remembering the beginning of the 2007 financial crisis, but it's too early to call it a widespread crisis,” said Guillermo Hernandez Sampere, head of trading at MPPM. Still, “problems in the financial sector can cause unrest in the overall market, even though the system is more resilient than during the last crisis,” he said.
Europe's stock rally, which was largely spearheaded by the banking sector, has already faltered in recent days as worries about a US-China trade war eroded risk sentiment.
Among individual stocks, BBVA SA's shares slipped after its $19 billion offer for Banco Sabadell SA was rejected by three quarters of shareholders, ending a takeover saga that has dragged on for almost a year and a half.
EssilorLuxottica surged 10% after reporting a sales boost From Meta smart glasses while Novo Nordisk A/S fell 4.6% after US President Donald Trump touted ‘much lower’ prices for the anti-obesity drug Ozempic.
"With this year's rally and costly valuations, the temptation to take profits and secure year-to-date gains is high for investors," Raphael Thuin, head of capital markets strategies at Tikehau Capital.(asd)
Source: Bloomberg
