By Barbara Kollmeyer, MarketWatch , Emily Horton
European stocks tumbled Thursday, carving out a fresh 52-week low, one day after the Federal Reserve raised interest rates for a fourth time this year, exacerbating a risk-off downturn.
How are the markets performing?
The Stoxx Europe 600 /zigman2/quotes/210599654/delayed XX:SXXP +0.83% ended 1.5% lower at 336.58, after finishing up 0.3% on Wednesday. The decline represented the lowest close for the pan-European gauge since Nov. 8 2016, according to Dow Jones Market Data. It is down by about 16% since its most recent high on Jan. 23.
The German DAX /zigman2/quotes/210597999/delayed DX:DAX +0.79% fell 1.4% to finish at 10,611.10. The index is now down 22% from its 52-week high, and has been trading in bear-market territory for the last several sessions. A bear market is usually defined as a drop of at least 20% from a recent peak.
France’s CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 +0.90% closed 1.8% lower at 4,692.46. The FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +1.02% logged the lightest losses, ending 0.8% lower at 6,711.93.
European currencies were stronger on Thursday, helped by a weak U.S. dollar. The euro /zigman2/quotes/210561242/realtime/sampled EURUSD +0.0370% rose to $1.1482, compared with $1.1379 in New York late on Wednesday, while the British pound /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.0077% climbed to $1.2686 from $1.2662. The Swedish krona /zigman2/quotes/210561879/realtime/sampled USDSEK -0.0419% was one of the best performers of the day, rallying after Sweden’s Riksbank raised interest rates.
What is driving markets?
European stocks felt the pain of a global shift to a risk-off sentiment on Thursday, which also saw Asian and U.S. equity markets register losses. This came on the coattails of Wednesday’s Federal Reserve policy update in which the central bank raised interest rates but downgraded its forecast for future increases from three to two. U.S. stocks, which had rallied in the run-up to the decision, sold off sharply and stayed lower on Thursday.
Europe, which closed before that Fed decision was announced, followed up on Thursday with losses of its own.
In local central bank news, Sweden’s Riksbank raised interest rates for the first time in seven years, though the benchmark repo rate remained in negative territory.
Elsewhere, the Bank of England on Thursday voted unanimously to keep lending rates on hold, citing concerns over global growth and Brexit risks. Data showed retail sales rose in November in the U.K., with a big lift coming from Black Friday online shopping.
What stocks are active?
Bank stocks underperformed, including Deutsche Bank /zigman2/quotes/203042512/composite DB -0.37% /zigman2/quotes/205584254/delayed DE:DBK -0.30% /zigman2/quotes/207242873/delayed XE:DBK -0.69% , which closed more than 7% lower. Credit Suisse /zigman2/quotes/202835784/composite CS +0.81% /zigman2/quotes/205269278/delayed CH:CSGN +0.93% ended 3.8% down and Credit Agricole /zigman2/quotes/209264506/delayed FR:ACA -0.11% fell 4%.
Airline stocks were in focus after London Gatwick Airport shut down late Wednesday, amid reports that two drones were flying above the airfield led to a formal investigation. Ryanair Holdings PLC /zigman2/quotes/205429530/delayed IE:RY4C +0.55% slid 2.6% /zigman2/quotes/205496028/delayed DE:LHA +1.05% all fell by 2%. Cruise line company Carnival PLC /zigman2/quotes/210414141/delayed UK:CCL +1.07% lost 5%.