Credit concerns reach European markets as bank stocks slide 2.8%
European markets were trading in the red on Friday morning as concerns about the banking sector reached the region.
The pan-European Stoxx 600 was down 1.5% at 8:26 a.m. London time (3:26 a.m. ET), while all major indexes and sectors were in negative territory. England’s FTSE index fell by 1.5%, France’s CAC 40 index fell by 0.7%, Germany’s DAX and Italy’s FTSE MIB index fell by over 2%.
This comes as contagion in the US banking sector weighed on European stocks on Friday. Stoxx Europe 600 Bank Index It slips around 2.8%.
Shares of regional banks and investment bank Jefferies tumbled on Thursday as fears grew about bad loans lurking on Wall Street.
Stoxx Europe 600 Bank Index
Elsewhere in the banking sector, Spanish bank BBVAhostile takeover attempt by Sabadell It failed on Thursday when it failed to persuade shareholders to support a 16.32 million euro ($19.1 million) bid.
BBVA shares rose 5.7% on Friday, while Sabadell’s shares fell 6.1% as investors reacted to the news.
Defense stocks also became the center of attention after it was announced that US President Donald Trump and Russian President Vladimir Putin would meet in Hungary to discuss the ongoing war in Ukraine.
The Stoxx European Total Market Aerospace and Defense index fell more than 3% on Friday.
This marks a sharp shift for the banking and defense sectors, which have been bright spots in this year’s rally for European stocks. The relevant indices increased by approximately 54% and 60% throughout 2025.
Volvo fell 5 percent
Swedish truck manufacturer from a corporate perspective Volvo Group reported slightly higher-than-expected third-quarter profit on Friday.
The Gothenburg-based company, which produces trucks, buses and construction equipment, stated that its net profit in the third quarter was 11.7 billion Swedish crowns ($1.3 billion) and that “challenging market conditions in North America and South America negatively affected sales.” Analysts surveyed by LSEG were expecting a net profit of 8.75 billion Swedish krona.
Volvo Group’s shares are down about 1% year-to-date. They fell 5.4% in early trading Friday.
On the other hand, investors will monitor European inflation data. Inflation was a key focus among delegates at the annual meetings of the IMF and World Bank this week. “The easing cycle is nearing its end or has ended,” European Central Bank Governing Council member Martin Kocher told CNBC in an exclusive interview.
Britain’s data bureau, the Office for National Statistics, released monthly growth figures on Thursday, showing the economy grew by a weak 0.1% in August.
Meanwhile, the Swiss government lowered its 2026 growth forecast to 0.9% as Trump’s tariffs affected Switzerland’s export-heavy economy.
Most indexes traded lower on Friday, except for South Korea’s Kospi index, which reached record highs in Asian markets. This comes as the country continues trade deal talks with the US
U.S. stock futures fell Thursday night, driven by a sell-off in banking stocks in the previous session.
— CNBC’s Sam Meredith and Silvia Amaro contributed to this report.
