European markets were rattled, with the FTSE 100, Dax, and Cac 40 all falling, after reports of bad loans and alleged fraud at two US regional banks. The news sparked fears of a wider credit crisis.
The banks, Zions and Western Alliance, saw their shares plunge after disclosing $150 million in combined credit issues. This sparked a global sell-off, with the pan-European banking sector losing €37.4 billion in value.
Major lenders like Barclays, Deutsche Bank, and Banco Sabadell were among the biggest fallers. The anxiety also hit Asian markets, with the Nikkei and Hang Seng closing lower.
The episode drew comparisons to the 2023 SVB crisis. Investors, fearing a domino effect, fled to the safety of gold, pushing its price to a new record high. The VIX “fear index” also surged.