Fears of a repeat of the 2023 banking crisis were revived, sinking global stocks after two US regional lenders reported significant bad loans. The news from Zions and Western Alliance sparked a worldwide sell-off.
Though these banks are much smaller than SVB, the news raised broader questions about credit quality and the impact of elevated interest rates. Analysts fear a “domino effect,” pointing to recent bankruptcies like Tricolor and First Brands.
The market reaction was severe. In Europe, the FTSE 100 and Dax fell, and the banking sector lost €37.4 billion. Barclays and Deutsche Bank were among the top fallers. Asian markets also closed deep in the red.
Investors fled to the perceived safety of gold, pushing its price to a new record of $4,378 an ounce. The VIX “fear index,” a measure of market volatility, spiked to its highest level since April.
