LONDON, June 19 — A slide in European bank and energy stocks was exacerbated by hawkish comments from a Federal Reserve official, which also saw the STOXX 600 index snap a four-week winning streak as fears of US policy tightening came to the fore.
The banking sector, which typically does well when interest rates are high, plunged nearly 3 per cent as concerns over an eventual reduction in liquidity saw investors locking in recent gains. Commodity markets were also hit by the Fed, with European energy stocks falling 2.9 per cent yesterday, in line with lower oil prices.
“We’ve been very positive on financials and energy since last November and now we’re seeing a reversal of that as investors scale back. But this is temporary phase; there’s definitely more upside for financials and energy, which are still relatively cheap.”
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