European stocks fell to a one-week low Wednesday, with bank shares among the worst performing, as investors questioned whether the new U.S. administration can soon deliver the fiscal and regulatory changes needed to support the “Trump trade.”
The Stoxx Europe 600 /zigman2/quotes/210599654/delayed XX:SXXP +1.84% dropped 0.4% to end at 374.03, marking its lowest closing level since March 14.
Wednesday’s loss built on a 0.5% drop on Tuesday, when a sharp selloff in the U.S. dampened the investment mood globally.
“Since Donald Trump’s election, markets in the U.S. have been marching higher, driven by nothing more than rampant speculation that this would be a hugely pro-business administration, but with promises failing to be delivered and a central bank that is taking an ever more hawkish view over monetary policy, it does seem as if the punch bowl is on the cusp of being withdrawn,” said Tony Cross, market analyst at TopTradr, in a note.
Analysts said the trigger for the selloff was the perception that President Donald Trump will struggle to push through his decided changes to health care. Thursday’s vote in the U.S. House of Representatives on the Republican Party’s health-care plan may be a litmus test for investors on whether the push for reforms in the U.S. will be successful.
Shares of European banks — many of which have U.S. operations — have been beneficiaries of expectations that regulatory restrictions will be loosened and that the Fed will continue to raise interest rates, as higher rates help bank margins. The Stoxx Europe 600 Bank Index /zigman2/quotes/210599339/delayed XX:SX7P +1.00% was shaken down 0.9% on Wednesday.
Among decliners, Deutsche Bank AG /zigman2/quotes/205584254/delayed DE:DBK +2.40% /zigman2/quotes/203042512/composite DB +2.93% fell 1.7%, Credit Agricole SA /zigman2/quotes/209264506/delayed FR:ACA +1.42% lost 0.7% and Barclays PLC /zigman2/quotes/208409333/delayed UK:BARC +1.09% /zigman2/quotes/206581728/composite BCS +1.81% dropped 2.4%.
Movers: Also weighing on the bank sector was ING Groep NV’s /zigman2/quotes/203351007/delayed NL:INGA +1.99% /zigman2/quotes/203566071/composite ING +2.12% disclosure that it is under a criminal investigation by Dutch officials could lead to significant penalties. Reports Wednesday said the investigation was tied to an alleged bribery case in Uzbekistan. ING shares closed 4% lower.
Fiat Chrysler Automobiles fell 0.6% following reports that a formal investigation into whether the company cheated in tests for diesel emissions was opened by French prosecutors.
Gemalto NV shares plunged 17% after the digital security firm cut its financial guidance.
Akzo Nobel NV /zigman2/quotes/209835399/delayed NL:AKZA +2.41% /zigman2/quotes/204497961/delayed AKZOY +2.06% fell 1.1% after the Dutch paint and chemicals maker rejected a second takeover offer from PPG Industries Inc. /zigman2/quotes/202418877/composite PPG +2.25% .
London attack: At least one person was reported dead and dozens injured in the U.K. capital after a car early afternoon car drove directly toward pedestrians on Westminster Bridge, near the Houses of Parliament. Gun shots were following fired near the parliament and a police officer was stabbed.
“We are treating the attacks as a terrorist incident until we know otherwise,” London’s Metropolitan Police said on a post to Twitter .
Indexes: The U.K.’s FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +1.62% gave up 0.7% to close at 7,324.72, having trade lower all through the session.
The euro /zigman2/quotes/210561242/realtime/sampled EURUSD -0.2158% was buying $1.0805, compared with $1.0812 late Tuesday in New York.