A financial contagion spread from the US to European and Asian markets, triggered by bad loan woes at two regional lenders. The news from Zions Bancorporation and Western Alliance sparked a global sell-off led by banking stocks.
Asian markets fell first, with the Nikkei dropping 1.6% and the Hang Seng 2%. The pessimism continued in Europe, where the FTSE 100, Dax, and Cac 40 all closed lower. The pan-European banking sector lost €37.4 billion in value.
Major banks like Barclays, Deutsche Bank, and Banco Sabadell saw their shares plunge. The panic revived fears of the 2023 SVB crisis, with investors now questioning the stability of the wider financial system.
In a classic flight to safety, investors dumped equities and bought gold, sending the precious metal to a new record high. The VIX “fear index” surged, reflecting the deep anxiety in the market.