EUROPEAN EQUITIES UPDATE: US regional bank woes weigh on stocks

STOXX 600: -1.9%

• European equities opened lower amid resurfacing concerns stemming from the US regional bank sector, which saw downside on Thursday after Zion Bancorp (ZION) and Western Alliance (WAL) tumbled after Zions disclosed a charge-off from defaulted commercial loans and the latter reported fraud. The downbeat sentiment reverberated from Wall Street to APAC and then to Europe. FTSE 100 (-1.5%), DAX (-2%), CAC 40 (-0.7%), and Euro Stoxx 50 (-1.4%) have extended losses since the opening.


• In geopolitics, Trump announced that his call with Putin was a productive one. This has led to the defensive sector taking a hit with key European defensive companies such as Rheinmetall (-4.1%), Airbus (-2.1%), and BAE Systems (-2.6%) all unwinding some geopolitical premium.


• Looking ahead: In Europe, final HICP data for September is expected to show the annual rate unrevised at 2.2% Y/Y, while the core and super-core metrics are also seen unrevised. Speakers ahead include ECB's Nagel, Rehn and Donnery (supervision). BoE's Chief Economist Pill, Greene, and Breeden.

Sectors: Negative

• European Sectors are red across the board. The Food and Beverage sector (-0.07%) is number one, though it’s still operating in the red. Unsurprisingly, the biggest losers are the banking (-2.8%) and financial sectors (-2.5%) following newsflow from Zion Bancorp and Western Alliance loan fraud disclosure. Key banking and finance companies such as Barclays (-5.5%), Exor NV (-2.1%) and Lloyds (-2.4%) have extended losses.


• Industrial goods & services is the third biggest loser due to losses in Rheinmetall (-4.1%), Airbus (-2.1%) and BAE Systems (-2.6%), key defensive companies after Trump signalled positive progress regarding talks with Putin.


• Elsewhere, Novo Nordisk (-6.2%) shares are down after Trump calls for a swift price cut for Ozempic, weighing down the health care sector (-1.2%). The automobile sector has seen downward pressure from losses in Volvo (-6.7%) due to the company announcing that it expects trucking demand in North America to remain under pressure into next year.

Movers

• Continental (+4.7%) - Shares are up after Q3 2025 (EUR): EBIT 11.4% (exp. 8.9%), Revenue 5bln (exp. 4.9bln); affirms FY guidance.


• Pearson (+3.6%) - 9-month trading update: Q3 underlying revenue +4 Y/Y, expects stronger sales growth in Q4, 2025 sales growth and adj. operating profit in line with expectations.


• Sabadell (-6.9%) – Shares have plummeted after the BBVA (+6%) takeover failed to materialise.

US Equity Futures: Russell (-1.7%), NQ (-1.5%), ES (-1.3%) and Dow Jones (-0.9%)

• US equities continue to face downward pressure in the pre-market, amidst the Western Alliance and Zion Bancorp news. The regional banking woes saw KRE (Regional Banking ETF) close lower by over 6% and the financial sector saw a near 3% hit, while the broad risk sentiment was hit with equities sliding throughout the US session, which spurred haven flows.


• Looking ahead: Speakers include Fed's Musalem (2025 voter) and US Atlanta Fed GDP (timing for guidance only); the Fed will enter its blackout period on October 18th ahead of its October 29th confab. Earnings from Ally Financial, SLB, American Express

17 Oct 2025 - 09:55- EquitiesEU Research- Source: Newswires