Global Markets
Europe's STOXX 600 has its worst day in three weeks as euro zone banks drop 4.2% and chipmakers track Wall Street lower
Bankinter's deposit-cost squeeze and Barclays' miss hit lenders, while the gap between French and German 10-year yields widened to a 15-year high.
HedgeWeekly News Desk ·
European shares suffered their heaviest fall in three weeks on Thursday, as a slide in bank stocks combined with a global selloff in chipmakers and higher oil. The pan-European STOXX 600 closed more than 1% lower at 637.74 points, Reuters reported. Euro zone banks were the biggest drag, falling 4.2% in their weakest session since March, and the technology sector lost 2%.
Bankinter dropped 7.6% after third-quarter results showed higher interest rates pushing up deposit costs and squeezing margins. Barclays fell 2.3% after quarterly profit came in below forecasts; the lender also plans to cut about 5,000 jobs, roughly 5% of its workforce, this year. Infineon, STMicroelectronics and ASML each lost between 5% and 6%, and BE Semiconductor fell 3.1% after its results. Hermès slid 5% after quarterly revenue came in slightly short of expectations.
Defensive sectors cushioned the fall. Healthcare rose 2.1%, led by a 21.6% jump in UCB after the Belgian drugmaker raised its 2026 revenue growth forecast, and Nestlé added 1.1% after beating third-quarter organic growth forecasts. In bond markets the spread between French and German 10-year yields reached a fresh 15-year high, which FinancialJuice put at 175 basis points, as political uncertainty and protests in France weighed on French debt. Brent crude hit a five-month high near $112 a barrel.
Why it matters: Bankinter's quarter highlights the other side of higher rates for European bank investors, with the cost of deposits now catching up and pressuring margins, at a time when bank shares are also exposed to the risk-off move in wider markets. For allocators holding European sovereign debt, the widening French premium over Bunds is the second pressure point; Capital Economics said the spread probably has further to run over the coming months. Watch the remaining European bank results and French budget developments for whether Thursday's moves extend.