European stock markets sank, with London’s FTSE 100 falling 0.9% and Germany’s Dax dropping 1.8%, as anxieties over the US banking sector crossed the Atlantic. The sell-off was broad, but banks were the worst affected.
The concerns stemmed from two US regional lenders, Zions and Western Alliance, which reported significant losses from bad loans. This news, while seemingly isolated, sparked a global rout over fears of wider, undiscovered credit issues.
The pan-European banking industry lost €37.4 billion in value. Barclays shares fell nearly 6%, while Deutsche Bank and Spain’s Banco Sabadell also posted heavy losses. This followed declines in Asia, where the Nikkei and Hang Seng both closed in the red.
Analysts warned of “storm clouds gathering” and drew parallels to the SVB collapse. The market uncertainty sent investors fleeing to safe-haven assets, with gold hitting a new record high. The VIX volatility index surged, confirming the market’s nervousness.