The Pan-European Stoxx 600 was 1.5% lower at 8:26 a.m. in London (3:26 a.m. ET), with all major indexes and sectors in negative territory. The U.K.’s FTSE index was 1.5% lower, France’s CAC 40 was down 0.7%, while Germany’s DAX and Italy’s FTSE MIB both fell over 2%.
In the U.S. on Thursday, shares of regional banks and investment bank Jefferies tumbled as fears mounted around some bad loans lurking on Wall Street.
Stoxx Europe 600 Banks Index
Elsewhere in the banking sector, Spanish bank BBVA‘s attempted hostile takeover of Sabadell failed on Thursday, when it failed to convince shareholders to back the 16.32 million euro ($19.1 million) bid.
BBVA shares rose 5.7% on Friday as investors reacted to the news, while Sabadell’s fell 6.1%.
Defense stocks are also in the spotlight after it was announced that U.S. President Donald Trump and Russian President Vladimir Putin will be meeting in Hungary to discuss the ongoing war in Ukraine.
The Stoxx Europe Total Market Aerospace and Defense index was over 3% lower on Friday.
It marks a stark change for the banking and defense sectors, which have been bright spots in the European equities rally this year. Their respective indexes have gained around 54% and 60% over the course of 2025.
Volvo down 5%
On the corporate front, Swedish truckmaker Volvo Group on Friday posted marginally higher-than-expected third-quarter earnings.
The Gothenburg-based company, which manufactures trucks, buses and construction equipment, said third-quarter net profit came in at 11.7 billion Swedish kronor ($1.3 billion), noting “difficult market conditions in North America and South America impacted sales negatively.” Analysts polled by LSEG had expected net profit of 8.75 billion Swedish kronor.
Shares of Volvo Group are down around 1% year-to-date. They fell 5.4% in early trade Friday.
Elsewhere, investors will be watching European inflation data. Inflation has been a key focal point among delegates at the IMF and World Bank annual meetings this week. The “easing cycle is close to an end or at its end,” European Central Bank Governing Council member Martin Kocher told CNBC in an exclusive interview.
The U.K.’s data bureau, the Office for National Statistics, released its monthly growth figures on Thursday, showing the economy expanded by a meager 0.1% in August.
Meanwhile, the Swiss government reduced its 2026 growth forecast to 0.9% as Trump’s tariffs hit Switzerland’s export-heavy economy.
In Asian markets, most indexes traded lower on Friday, with the exception of South Korea’s Kospi which hit record highs. It comes as the country continues trade deal talks with the U.S.
U.S. stock futures edged lower on Thursday night amid a sell-off of banking stocks in the previous session.
— CNBC’s Sam Meredith and Silvia Amaro contributed to this report.
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