London Daily

Focus on the big picture.
Friday, Aug 22, 2025

European stocks slip as banking turmoil keeps sentiment fragile

European stocks slip as banking turmoil keeps sentiment fragile

European stock indexes edged lower on Friday after an early recovery ran out of steam, while Wall Street futures were mixed as investor sentiment remained fragile after a week of turbulence.
In a crisis that began with the collapse of US-based Silicon Valley Bank last Friday, risk appetite plunged earlier in the week as investors lost confidence in regional banks in the US and Credit Suisse in Europe. The tumultuous week saw bond yields drop as investors lowered their expectations for future rate rises.

Risk appetite showed signs of recovery on Thursday, helped by Credit Suisse saying it would borrow up to 50 billion Swiss francs ($54 billion) from the Swiss National Bank and, later in the day, a group of major banks injecting $30 billion in deposits into First Republic Bank, a mid-sized US lender.

Still, analysts say the worry about a possible banking crisis is far from over.

Credit Suisse’s chief executive said on Friday the bank was working hard to stem customers outflows, although this could take time. Credit Suisse shares resumed their decline.

European Central Bank supervisors do not see contagion for euro zone banks from the market turmoil, a source familiar with the content of an ad hoc supervisory board meeting earlier this week told Reuters.

At 1207 GMT, the MSCI world equity index, which tracks shares in 47 countries, was up 0.3 percent on the day.

Europe’s STOXX 600 was down 0.1 percent and set to lose 1.9 percent on the week overall.

London’s FTSE 100 was little changed. Wall Street futures were mixed.

The US 2-year Treasury yield, which is the most sensitive to shifts in interest rate expectations, was up 1 basis point on the day at 4.1426 percent — still closer to Wednesday’s six-month low of 3.72 percent than the peak of 5.084 percent it hit the previous week, which had been its highest since 2007.

The European Central Bank raised rates by 50 bps on Thursday, sticking to its pledge to fight inflation even as some investors called for a pause in the rate-hiking cycle until the banking turmoil eases.

The benchmark German 10-year yield was down 5 bps at 2.193 percent .

Markets are pricing in a 25 bps increase by the US Federal Reserve when it meets next week, down from previous expectations for a 50 bps increase.

Fed data on Thursday showed that banks sought record amounts of emergency liquidity in recent days, which in turn helped undo months of central bank effort to shrink the size of its balance sheet.

“The fact that the Fed has been very proactive in terms of opening the liquidity tap is potentially useful and that’s stabilized things in the short term at least,” said Guillaume Paillat, multi-asset portfolio manager at Aviva Investors.

“It’s potentially a more stable environment, because it feels like we’ve passed the crisis point and things should normalize a bit.”

Against a basket of currencies, the US dollar was down 0.2 percent. The Australian dollar, seen as a liquid proxy for risk appetite, was up 0.6 percent on the day at $0.6695.

The British pound and the euro were both up 0.2 percent .

Oil prices benefited from the initial resurgence of risk appetite, before paring gains, with Brent crude futures up 0.4 percent and US West Texas Intermediate crude up 0.7 percent after having hit their lowest in more than a year earlier in the week.
Newsletter

Related Articles

0:00
0:00
Close
After 200,000 Orders in 2 Minutes: Xiaomi Accelerates Marketing in Europe
Ukraine Declares De Facto War on Hungary and Slovakia with Terror Drone Strikes on Their Gas Lifeline
Animated K-pop Musical ‘KPop Demon Hunters’ Becomes Netflix’s Most-Watched Original Animated Film
New York Appeals Court Voids Nearly $500 Million Civil Fraud Penalty Against Trump While Upholding Fraud Liability
Elon Musk tweeted, “Europe is dying”
Far-Right Activist Convicted of Incitement Changes Gender and Demands: "Send Me to a Women’s Prison" | The Storm in Germany
Hungary Criticizes Ukraine: "Violating Our Sovereignty"
Will this be the first country to return to negative interest rates?
Child-free hotels spark controversy
North Korea is where this 95-year-old wants to die. South Korea won’t let him go. Is this our ally or a human rights enemy?
Hong Kong Launches Regulatory Regime and Trials for HKD-Backed Stablecoins
China rehearses September 3 Victory Day parade as imagery points to ‘loyal wingman’ FH-97 family presence
Trump Called Viktor Orbán: "Why Are You Using the Veto"
Horror in the Skies: Plane Engine Exploded, Passengers Sent Farewell Messages
MSNBC Rebrands as MS NOW Amid Comcast’s Cable Spin-Off
AI in Policing: Draft One Helps Speed Up Reports but Raises Legal and Ethical Concerns
Shame in Norway: Crown Princess’s Son Accused of Four Rapes
Apple Begins Simultaneous iPhone 17 Production in India and China
A Robot to Give Birth: The Chinese Announcement That Shakes the World
Finnish MP Dies by Suicide in Parliament Building
Outrage in the Tennis World After Jannik Sinner’s Withdrawal Storm
William and Kate Are Moving House – and the New Neighbors Were Evicted
Class Action Lawsuit Against Volkswagen: Steering Wheel Switches Cause Accidents
Taylor Swift on the Way to the Super Bowl? All the Clues Stirring Up Fans
Dogfights in the Skies: Airbus on Track to Overtake Boeing and Claim Aviation Supremacy
Tim Cook Promises an AI Revolution at Apple: "One of the Most Significant Technologies of Our Generation"
Apple Expands Social Media Presence in China With RedNote Account Ahead of iPhone 17 Launch
Are AI Data Centres the Infrastructure of the Future or the Next Crisis?
Cambridge Dictionary Adds 'Skibidi,' 'Delulu,' and 'Tradwife' Amid Surge of Online Slang
Bill Barr Testifies No Evidence Implicated Trump in Epstein Case; DOJ Set to Release Records
Zelenskyy Returns to White House Flanked by European Allies as Trump Pressures Land-Swap Deal with Putin
The CEO Who Replaced 80% of Employees for the AI Revolution: "I Would Do It Again"
Emails Worth Billions: How Airlines Generate Huge Profits
Character.ai Bets on Future of AI Companionship
China Ramps Up Tax Crackdown on Overseas Investments
Japanese Office Furniture Maker Expands into Bomb Shelter Market
Intel Shares Surge on Possible U.S. Government Investment
Hurricane Erin Threatens U.S. East Coast with Dangerous Surf
EU Blocks Trade Statement Over Digital Rule Dispute
EU Sends Record Aid as Spain Battles Wildfires
JPMorgan Plans New Canary Wharf Tower
Zelenskyy and his allies say they will press Trump on security guarantees
Beijing is moving into gold and other assets, diversifying away from the dollar
Escalating Clashes in Serbia as Anti-Government Protests Spread Nationwide
The Drought in Britain and the Strange Request from the Government to Delete Old Emails
Category 5 Hurricane in the Caribbean: 'Catastrophic Storm' with Winds of 255 km/h
"No, Thanks": The Mathematical Genius Who Turned Down 1.5 Billion Dollars from Zuckerberg
The surprising hero, the ugly incident, and the criticism despite victory: "Liverpool’s defense exposed in full"
Digital Humans Move Beyond Sci-Fi: From Virtual DJs to AI Customer Agents
YouTube will start using AI to guess your age. If it’s wrong, you’ll have to prove it
×