Global Markets Plunge as Jitters Over US Private Credit Grow
Stock markets around the world tumbled on Friday, with European shares falling by 0.9%, Germany's Dax dropping 1.8%, and Italy's FTSE Mib sliding 1.5%. The decline was driven in part by concerns over credit stress in the US private credit market, which has been exposed to millions of dollars of bad loans and alleged fraud.
Banks were among the hardest hit, with nearly £11bn wiped off the value of the five largest listed banks in the UK alone. Barclays was particularly affected, seeing its shares plummet by nearly 6%. The decline extended beyond European markets, with Spain's Banco Sabadell falling by 6.78% and Germany's Deutsche Bank shedding 6%.
The sell-off on Wall Street had been preceded by heavy losses on Thursday, as US regional banks reported significant exposure to bad loans and alleged fraud. Zions Bancorporation, a Utah-based lender, said it would write off $50m on two loans, while Western Alliance said it was starting legal proceedings over a bad loan worth $100m.
Shares in both banks plummeted by more than 10% and 9%, respectively. Analysts were quick to point out that the issues faced by these two banks were reminiscent of the collapse of Silicon Valley Bank last year, which triggered a major financial crisis.
"This was an ostensibly isolated story at two banks each with less than a $10bn market cap, but it drew inevitable comparisons to the regional bank stress that followed the collapse of SVB," said Jim Reid, an analyst at Deutsche Bank. "That raised broader questions over potential credit quality issues after a lengthy period of elevated rates and expansion in private credit."
As concerns over US private credit grew, investors turned to safe-haven assets, such as gold, which hit a record high of $4,378 (£3,262) per ounce, its biggest gain since the 2008 financial crisis. The VIX index surged by more than 22% on Thursday and rose another 6% on Friday morning.
The US regional banking industry has been under scrutiny in recent weeks, following the bankruptcy of First Brands, an auto parts supplier, which had at least $10bn to $50bn in liabilities against just $1bn to $10bn in assets. Analysts warned that investors were exposed to a new source of concern, with many pointing out that there are "increasing signs of storm clouds gathering over markets."
Stock markets around the world tumbled on Friday, with European shares falling by 0.9%, Germany's Dax dropping 1.8%, and Italy's FTSE Mib sliding 1.5%. The decline was driven in part by concerns over credit stress in the US private credit market, which has been exposed to millions of dollars of bad loans and alleged fraud.
Banks were among the hardest hit, with nearly £11bn wiped off the value of the five largest listed banks in the UK alone. Barclays was particularly affected, seeing its shares plummet by nearly 6%. The decline extended beyond European markets, with Spain's Banco Sabadell falling by 6.78% and Germany's Deutsche Bank shedding 6%.
The sell-off on Wall Street had been preceded by heavy losses on Thursday, as US regional banks reported significant exposure to bad loans and alleged fraud. Zions Bancorporation, a Utah-based lender, said it would write off $50m on two loans, while Western Alliance said it was starting legal proceedings over a bad loan worth $100m.
Shares in both banks plummeted by more than 10% and 9%, respectively. Analysts were quick to point out that the issues faced by these two banks were reminiscent of the collapse of Silicon Valley Bank last year, which triggered a major financial crisis.
"This was an ostensibly isolated story at two banks each with less than a $10bn market cap, but it drew inevitable comparisons to the regional bank stress that followed the collapse of SVB," said Jim Reid, an analyst at Deutsche Bank. "That raised broader questions over potential credit quality issues after a lengthy period of elevated rates and expansion in private credit."
As concerns over US private credit grew, investors turned to safe-haven assets, such as gold, which hit a record high of $4,378 (£3,262) per ounce, its biggest gain since the 2008 financial crisis. The VIX index surged by more than 22% on Thursday and rose another 6% on Friday morning.
The US regional banking industry has been under scrutiny in recent weeks, following the bankruptcy of First Brands, an auto parts supplier, which had at least $10bn to $50bn in liabilities against just $1bn to $10bn in assets. Analysts warned that investors were exposed to a new source of concern, with many pointing out that there are "increasing signs of storm clouds gathering over markets."
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this is what happens when you have too much money chasing too few good investments. someone needs to get to the bottom of this 
and ppl are freaking out about svb all over again 
what's the diff tho? is it because banks are still taking bad loans or something? 
i dont get how this all works 
, and everyone's feeling the pinch 
. The fact that analysts are drawing comparisons to SVB is worrying 
, which is a good sign... for now 
. Anyone else worried about where this might lead? 
I'm telling you, this is not just about US private credit market, it's about the whole global economy! Banks are playing with fire by lending money to anyone who walks in the door, and now they're expecting everyone else to bail them out? No way, mate. The fact that Barclays' shares plummeted 6% is just a symptom of a bigger problem – lack of regulation and oversight. We need to be careful not to sweep this under the rug or create more chaos by trying to prop up failing banks with billions in taxpayers' money. 
. It's likely that investors are taking a cautious approach, prioritizing safe-haven assets like gold, as a hedge against potential losses 
. Analysts are right to draw parallels between this situation and the broader concerns over credit quality, especially given the prolonged period of elevated interest rates and private credit expansion 
.
. The notion that "increasing signs of storm clouds gathering over markets" is a compelling one – it's time for us to pay attention and prepare for potential challenges ahead 
.
like what's going on with those bad loans and alleged fraud? 
banks getting bashed, shares plummeting... and gold prices skyrocketing 
. I don't get why this is such a big deal though - isn't that just how banks work? They take risks and sometimes it doesn't pay off... 
Anyway, it's making everyone nervous and causing investors to run to safe-haven assets like gold 
. i guess its good to know that gold is doing okay and all, but still not sure about the vibes around this whole credit market thing 
. Safe-haven assets like gold are up, which is a bit of a silver lining 
.
And Now Investors Are Freaking Out Over Safe-Haven Assets Like Gold 
And now investors are all about safe-haven assets like gold? Yawn 
. It's not exactly exciting to see the market tanking every time there's a minor issue with some bank or another... Can't we just have a stable financial system for once?! 