The markets in Europe delivered mixed signals on Wednesday as investors remained on edge amid escalating war, regulatory breakthroughs, and warnings from the central bank.
The biggest development came from the fintech space as Revolut secured a long-awaited UK banking license.
But the tensions remained high as the European Central Bank cautioned that market volatility could amplify economic shocks.
Stocks in London slipped amid oil-driven uncertainty tied to the Iran conflict, while the diplomatic tensions between Spain and Israel deepened.
Revolut lands full UK banking license
Revolut has finally secured a full UK banking license from the Prudential Regulation Authority, ending a long regulatory journey that began in 2021.
The company will now roll out current accounts to a select group of new customers in the coming weeks, with plans to expand into lending and mortgages.
The road was far from smooth as regulators had raised red flags over accounting irregularities, EU compliance breaches, and concerns about whether Revolut’s risk controls could keep pace with its aggressive global growth.
The firm was stuck in a restricted “mobilization phase” since July 2024, capped at holding just £50,000 in total customer deposits.
ECB warns market swings could deepen economic pain
ECB Vice President Luis de Guindos sounded a cautious note on Wednesday, as he warned that the financial market volatility can make economic shocks hit harder.
Speaking at a conference in Madrid, he said the fallout from the war in Iran has pushed oil prices up nearly 50% since the start of the year, and it has complicated the bank’s ability to forecast growth and inflation.
De Guindos said the ECB would examine multiple scenarios ahead of its March 19 policy meeting.
Markets are now pricing in 30 to 35 basis points of rate hikes this year, which is a sharp swing from just two weeks ago when no increases were expected at all.
London stocks plunge
London’s main equity indexes closed in the red on Wednesday, weighed down by volatile oil prices and mixed corporate results.
The blue-chip FTSE 100 fell 0.6% while the mid-cap FTSE 250 dropped 0.7%, as the ongoing conflict in the Middle East kept investors in risk-off mode.
Brent crude climbed back above $90 a barrel after markets brushed off the IEA’s reported plan for a record release of oil reserves.
Shell and BP each edged up around 0.5% as energy stocks bucked the broader decline.
On the corporate side, Legal & General dropped 5.5% after missing full-year profit estimates, while recruiter Robert Walters fell nearly 3% after scrapping its final dividend.
Balfour Beatty was the standout gainer, surging 7.3% on a strong profit outlook backed by a record pipeline of UK power projects.
Spain formally withdraws its ambassador to Israel
Spain has permanently withdrawn its ambassador to Israel, Ana María Salomón Pérez, formalizing a diplomatic break that had been building for months.
The dismissal, approved by Spain’s Council of Ministers on Tuesday and published in the official state gazette on Wednesday, leaves the Spanish embassy in Tel Aviv under a chargé d’affaires, the same reduced status as Israel’s embassy in Madrid.
The move traces back to a September 2025 recall, when Madrid pulled Salomón for consultations after Israel’s foreign minister called Spain “antisemitic” over its ban on arms-carrying ships and aircraft using Spanish ports or airspace.
Relations had already soured sharply since Spain recognized a Palestinian state in 2024, prompting Israel to pull its own envoy from Madrid.
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