Historically U.K. equities have outperformed European equities during periods of market weakness due to the U.K. market’s weighting in classic defensive groups. However, the outperformance this go-round is due to the financial sector. The U.K. banking subsector was boosted by acquisition activity and investors’ preference for U.K. banks’ low volatility, high dividend yields, and strong cash flows relative to their continental European counterparts. However, the earnings prospects for European banks are improving, while U.K. banks shares seem to be slowing.