A 33% decline in quarterly profit at German financial bellwether Deutsche Bank (NYSE: DB) weighed on a struggling ETF tracking the European financial sector on Thursday.
Deutsche Bank’s first-quarter results were dinged by a hefty charge and simmering concerns over the Eurozone debt crisis. Investors are closely watching European bank stocks to gauge the potential fallout.
“Equity markets rallied and credit spreads tightened during the quarter. Nevertheless, investors, particularly private investors, remained wary after the market turmoil of last year, and this cautious sentiment affected business volumes,” said chief executive Josef Ackermann in a shareholder letter.
“Furthermore, conditions in the global economy remain challenging. In the United States, employment figures showed signs of improvement, but real estate markets remain subdued,” he wrote.
The iShares MSCI Europe Financial Sector Index Fund (NYSEArca: EUFN) was down nearly 1% on light volume Thursday. The $21 million ETF has 3.5% in Deutsche Bank shares, and other top holdings include European lenders. [ETFs for an Improving Europe]
The European financial fund has dropped about 9% the past month as rising government bond yields in Spain have put Europe’s shaky finances back in the spotlight.