European Markets Plummet Amid Oil Price Surge and Rate Hike Fears

European markets took a hit on Tuesday due to concerns over oil prices and potential interest rate hikes. The pan-European STOXX 600 index fell 0.4% to 633.3 points at 0707 GMT, with almost all major regional stock exchanges reporting losses.

The banking sector was particularly affected, dropping by 1.3%. This downturn in the market is being driven by inflation concerns, which are causing investors to become more cautious ahead of the US Federal Reserve's monetary policy decision later this week.

The yield on the benchmark U.S. 10-year Treasury reached a significant level, touching 5% for the first time since October 2023. As a result, traders are increasingly expecting a 25-basis-point rate hike by the Federal Reserve, reminiscent of the European Central Bank's recent second rate increase.