European Stocks Slide as Banking Worries and Inflation Data Weigh on Sentiment

European equities tumbled on Friday, mirroring sharp overnight losses on Wall Street, as renewed concerns over the health of U.S. regional banks and caution ahead of key Eurozone inflation data rattled investor confidence.

Regional Indices Under Pressure

By 07:10 GMT (03:10 ET), Europe’s major benchmarks were all trading in negative territory:

• Germany’s DAX dropped 2%,
• France’s CAC 40 fell 1.1%, and
• Britain’s FTSE 100 slipped 1.5%.

The slump followed a broad selloff on Wall Street, where the Dow Jones Industrial Average lost over 300 points, while the S&P 500 and NASDAQ Composite each retreated around 0.5%–0.6%. Bank stocks led the decline after a wave of disappointing updates from U.S. lenders.

Banking Sector Under Scrutiny

Financial stocks remained under intense pressure on both sides of the Atlantic.
In the U.S., Zions Bancorporation (NASDAQ:ZION), Jefferies Financial Group (NYSE:JEF), and Western Alliance Bancorporation (NYSE:WAL) all reported a rise in bad loans, reigniting fears about credit quality and regional bank stability.

These revelations came amid lingering memories of the 2023 U.S. bank failures, raising questions about whether smaller banks are once again vulnerable as economic growth slows.

Investors are now awaiting results from Comerica (NYSE:CMA) and Fifth Third Bancorp (NASDAQ:FITB) later today for further clues on the sector’s health.

In Europe, Sweden’s Norion Bank (ST:NORION) offered a bright spot, reporting a 10% jump in Q3 net profit and announcing plans for a share buyback program, helping limit the broader sector’s losses.

Eurozone Inflation in Focus

Attention now shifts to the Eurozone CPI release, expected to confirm 2.2% annual inflation in September, just above the European Central Bank’s 2% target.

The ECB has held rates steady since June, after cutting by 200 basis points earlier in the year. Policymakers are expected to maintain the current stance at the upcoming meeting, balancing subdued growth with lingering inflation risks.

France’s Political Instability Lingers

In France, Prime Minister Sebastien Lecornu survived two no-confidence votes on Thursday, reducing the immediate risk of early elections.
However, the victory came at a steep political cost for President Emmanuel Macron, who was forced to shelve his flagship pension reform until after the 2027 presidential election.

The deferral is projected to leave a €13 billion annual gap in public finances by 2035 if not reversed, according to government auditors — a move that could constrain France’s fiscal flexibility in the coming decade.

Corporate Highlights

• Pearson (LON:PSON) rose after reporting 4% Q3 sales growth, with management projecting stronger momentum in Q4, driven by demand for digital education products.
• Volvo (ST:VOLVb) delivered a steady Q3 profit, matching expectations despite soft demand in the Americas.
• Hermès (EPA:HRMS) confirmed the departure of Veronique Nichanian, its menswear artistic director after 37 years, signaling a leadership shift at the luxury house.
• Porsche (ETR:PSHG_p) shares were in focus following reports that its supervisory board has finalized a CEO succession plan for Oliver Blume.