European stock markets fell as investors braced for a week-long central bank rate hike and key news from the banking sector.
The pan-European Stoxx 600 index fell 1.5% in London, and healthcare losses across all sectors rose 0.2%. The sector fell 4.7%, despite assurances from policymakers that the system is sound after the recent turmoil.
Citigroup downgraded the European banking sector to neutral this week, citing the effects of prolonged monetary policy tightening.
Deutsche Bank experienced an 11.8% drop, after a 3.3% decline the previous day. The bank saw an increase in its credit default swaps, a type of security for bondholders.
Financial services stocks fell 1.8%, mining stocks fell 2.6% and oil and gas stocks fell 3.4%.
The Bank of England raised its policy rate by 25 basis points to 4.24% on Thursday, which markets appreciated after UK inflation gapped surprisingly.
The Swiss central bank increased its interest rate by 0.5%.
US stocks ended the session higher after the Fed signaled it would rise another 0.25% point this year. However, European stocks were smaller during the session.
GfK’s monthly consumer confidence statistics showed UK households turned more optimistic in February, an improvement it signals including the future financial situation, the ability to finance major purchases and increased economic activity.
Emerging Market Stocks
Emerging-market stocks fell back as US-China tensions escalated, erasing gains that had accumulated over the past three days. Anxiety about the banking industry also persisted. This marks the highest performance of the main index in the two months since.
Shares in China and Hong Kong each fell 0.7% after geopolitical instability in the US weighed on investor sentiment.
But concerns about the state of the US banking sector continued even after the US Treasury Secretary assured that appropriate steps would be taken to preserve Americans’ deposits amid instability in the sector. caused by the collapse of two regional US banks.
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