Investors were spooked by news of bad loans at two small US banks, sending shockwaves through global markets and reviving fears of a wider banking crisis. Shares in Zions Bancorporation and Western Alliance plunged after their announcements.
This news triggered a domino effect. European stock markets fell, with the FTSE 100, Dax, and FTSE Mib all down. The banking sector was hammered, with €37.4 billion wiped from European lenders. Barclays and Deutsche Bank were among the biggest fallers.
The sell-off also hit Asia, where the Nikkei and Hang Seng dropped. Analysts drew “inevitable comparisons” to the 2023 SVB collapse, warning that these “isolated” incidents could be symptomatic of broader credit quality issues.
The anxiety led to a massive flight to safety. Gold prices soared to a new record high of $4,378 an ounce, and the VIX “fear index” surged, reflecting the deep uncertainty gripping the market.