Reports of multi-million dollar bad loans and alleged fraud at two US regional banks triggered a global market rout, with bank shares leading the decline. Zions Bancorporation and Western Alliance plunged after disclosing the credit issues.
The news sparked “inevitable comparisons” to the 2023 SVB collapse, with investors fearing a wider systemic issue. The anxiety was compounded by other recent credit-related bankruptcies, such as Tricolor and First Brands.
The sell-off was global. Asian markets, including the Nikkei and Hang Seng, fell sharply. In Europe, the FTSE 100, Dax, and Cac 40 all dropped, dragged down by a massive sell-off in bank stocks that wiped €37.4 billion from the sector.
Investors rushed to safety, pushing gold to a record high of $4,378 an ounce, its best weekly gain since the 2008 financial crisis. The VIX “fear index” surged, reflecting the deep nervousness in the market.
