Bank stocks led a global market fall as the quality of private credit came under intense scrutiny. The sell-off was sparked by two US regional banks, Zions and Western Alliance, which reported significant bad loans.
The news sent shockwaves across continents. In Europe, the FTSE 100, Dax, and other indices fell, with the banking sector losing €37.4 billion in value. Barclays and Deutsche Bank were among the hardest hit. Asian markets also fell sharply.
The developments raised fears of a 2023-style banking crisis, with analysts warning of a potential “domino effect” following other recent credit-related bankruptcies. The focus has now turned to the underlying health of the economy.
Amid the turmoil, investors flocked to safe-haven assets. Gold prices surged to a new record high, and the VIX “fear index,” a measure of market volatility, spiked to its highest level since April.