LONDON — European stocks retreated on Thursday as global markets react badly to the latest monetary policy decision from the U.S. Federal Reserve.

The pan-European Stoxx 600 dropped 1% in early trade, with tech stocks shedding 3% to lead losses as all sectors slid into negative territory except banks, which gained 0.6%.

In terms of individual share price movement, Deutsche Bank gained 3.8% after defying market expectations to post a profit for the fourth quarter of 2021, as investment bank revenues rose.

The German lender said profit attributable to shareholders came in at 145 million euros ($162.7 million) for the final three months of the year — a sixth consecutive quarter of profit and almost triple its profit for the same period in 2020.

At the bottom of the European blue chip index, British boot brand Dr. Martens fell more than 16% after its quarterly earnings report.

Global markets are reacting badly to the Federal Reserve’s indication on Wednesday that it could soon raise interest rates for the first time in more than three years.

Read more: Japan and South Korea lead declines across Asia-Pacific as investors digest Fed remarks

The Fed’s policymaking group said a quarter-percentage point increase to its benchmark short-term borrowing rate is likely forthcoming. It would be the first increase since December 2018.

The post-meeting statement from the Federal Open Market Committee did not provide a specific time for when the increase will come, though indications are that it could happen as soon as the March meeting.  The statement comes in response to inflation running at its hottest level in nearly 40 years.

U.S. stocks initially rallied Wednesday even after the Federal Reserve pointed to an interest rate hike coming soon but overnight sentiment has changed. U.S. stock futures fell Thursday morning, indicating a sharply lower open on Wall Street.

Asia-Pacific markets fell across the board on Thursday overnight. Japan’s Nikkei 225 fell 3.3% while the Topix was down 2.3%. Over in South Korea, the benchmark Kospi dropped 3.13% and in Hong Kong, the Hang Seng index and the Hang Seng Tech index dropped 2.56% and 4.61%, respectively. Chinese mainland shares also declined.

Along with Deutsche Bank, earnings in Europe on Thursday came from Unicredit, LVMH, SAP, Banco Sabadell, easyJet, Diageo and STMicroelectronics. Renault provided a strategic update on the Nissan/Mitsubishi alliance.

On the data front, Germany’s GfK consumer sentiment index came in at -6.7 points heading into February from a revised -6.9 points a month ago, exceeding average analyst expectations for a drop to -7.8.