Bank stocks were hammered globally, with major European lenders like Barclays and Deutsche Bank leading the decline. Both banks saw their shares fall around 6%, while Spain’s Banco Sabadell dropped 6.78%, as a US-centric credit scare went global.
The panic started after two US regional lenders, Zions and Western Alliance, reported significant bad loans. This news, while seemingly isolated, sparked “inevitable comparisons” to the 2023 SVB collapse, fueling fears of a systemic issue.
The sell-off wiped €37.4 billion from the pan-European banking sector. Stock indices in London, Frankfurt, Paris, Tokyo, and Hong Kong all dropped significantly as the anxiety spread across continents.
Investors, fearing a domino effect, dumped risky assets and fled to safety. Gold prices surged to an all-time high of $4,378 an ounce, and the VIX volatility index spiked, signaling a sharp rise in market fear.