European stock markets experienced significant downturns, culminating in their worst weekly performance in over three years.

The IBEX 35 index witnessed dramatic fluctuations, at times losing over 7% of its value in a single trading session.

This marked one of the most challenging days in its history, with all constituent companies closing in negative territory.

The banking sector was notably affected, with average corrections exceeding 10%, primarily due to cyclical behavior and a reliance on economic activity, as concerns over reduced credit requests and consumer spending loom large.

Additionally, the uncertainty surrounding the global economic environment has hindered banking operations related to mergers, acquisitions, IPOs, and debt issuance.

Market speculation has also intensified surrounding potential interest rate cuts from the European Central Bank (ECB) as a response to this economic instability.

Such cuts could adversely impact interest margins, which are crucial for the banks.

In particular, banks such as BBVA and Santander experienced comparatively smaller declines, aided by the euro's appreciation against emerging market currencies.

Other sectors closely linked to economic cycles, including commodities, faced notable declines.

For instance, Repsol's stock price was negatively impacted by a significant drop in oil prices, which have reached their lowest levels in four years.

Utilities and companies that typically benefit from bond yield drops, such as Cellnex, also faced losses amid the ongoing market turbulence.

Across the Atlantic, U.S. markets mirrored this volatility.

The S&P 500 index recorded its most substantial drop since the onset of the pandemic, with fears exacerbated by China's announcement of a 34% tariff on American imports in response to ongoing trade tensions.

However, positive employment data from the U.S. aided in alleviating investor fears.

Employment growth exceeded forecasts while the unemployment rate inched upwards, indicating a robust labor market amidst potential global economic headwinds due to widespread tariffs.

The volatility index (VIX), often referred to as Wall Street's 'fear gauge,' surged beyond 40, reminiscent of previous market episodes characterized by high instability.

Major technology companies continued to lead declines in the stock market, paralleled by banks experiencing their lowest levels since August.

In the bond market, U.S. Treasury bonds have garnered renewed interest from investors, with the 10-year bonds falling below 4% for the first time since the 2016 elections.

Nonetheless, concerns persist regarding inflationary pressures and whether Federal Reserve Chairman Jerome Powell will opt against anticipated interest rate cuts in the near future.

Meanwhile, in Europe, increasing product supply from Asia could potentially reduce inflation, paving the way for future ECB rate cuts.

Oil prices were heavily affected, hitting a four-year low due to unexpectedly high production levels from OPEC+ countries alongside anticipated declines in demand attributed to ongoing trade disputes.

Other commodities also faced steep declines, impacted by broader financial market trends and rising fears of diminished consumption.

Copper prices dropped by as much as 6%, reaching their lowest mark since January, while European natural gas futures saw a staggering decline of up to 10%.

Gold, which had recently touched historical highs, faced a pullback following a surge in liquidations among investors favoring higher-yielding assets.

Despite this retreat, the overall outlook for gold remains positive, with conditions potentially favoring continued upward movement in the following months.