Fears of a new banking crisis sent stocks tumbling across the globe and pushed gold to a new record high. The panic, reminiscent of the 2023 SVB collapse, was ignited by bad loan announcements from two US regional banks.
Zions Bancorporation and Western Alliance saw their shares plunge after revealing $150 million in combined credit issues. This news raised “broader questions over potential credit quality issues” after a long period of high interest rates.
The reaction was a global rout. European and Asian stock indices fell sharply, with the banking sector at the epicenter. Barclays, Deutsche Bank, and Banco Sabadell were among the hardest hit, as the European banking industry lost €37.4 billion.
Investors, facing a “wall of worry,” fled to the safety of gold, which hit $4,378 an ounce, its best week since 2008. The VIX “fear index” surged, confirming the high level of market stress.