Global stocks plummeted on Friday as investors grew increasingly anxious about the health of the world's largest economy's private credit market. European markets suffered their worst losses in weeks, with nearly £11 billion wiped off the value of the UK's top five banks.
Banco Sabadell in Spain and Deutsche Bank fell by 6.78% and 6%, respectively, while Barclays was hit hardest, seeing its shares plummet by almost 6%. The pan-European banking industry took a significant hit, with €37.4 billion (£32 billion) lost in value.
The jitters started on Wall Street the previous day when two US regional banks announced they had been exposed to millions of dollars' worth of bad loans and alleged fraud. Zions Bancorporation, a Utah-based lender, said it would write off $50 million on two loans, while Western Alliance Bancorp reported that it had started legal proceedings over a bad loan valued at $100 million.
Shares in both banks plummeted by more than 10% and 9%, respectively, sending shockwaves through the markets. Analysts warned of a domino effect, citing the collapse of Silicon Valley Bank last year as a precedent for potential credit quality issues after years of high interest rates and private credit expansion.
"This was an ostensibly isolated story at two banks each with less than a $10 billion market cap," said Jim Reid, an analyst at Deutsche Bank. "The event drew inevitable comparisons to the regional bank stress that followed the collapse of Silicon Valley Bank in 2023... raised broader questions over potential credit quality issues."
As markets grew increasingly volatile, investors turned to safe-haven assets like gold, which surged to a record high of $4,378 (£3,262) an ounce, its biggest gain since the 2008 financial crisis. The VIX index, a measure of market volatility, surged by over 22% on Thursday and rose another 6% on Friday morning.
With the US banking industry under scrutiny, investors are growing increasingly concerned about lending practices and credit quality issues. Jamie Dimon, JP Morgan's CEO, earlier warned that more "cockroaches" could emerge after the collapse of Tricolor and First Brands, two companies that filed for bankruptcy in recent weeks over creditor concerns.
The turmoil in the markets has raised questions about the resilience of the US economy and the impact on global stocks. As investors struggle to gauge the extent of the damage, one thing is clear: the outlook for world markets looks increasingly uncertain.
Banco Sabadell in Spain and Deutsche Bank fell by 6.78% and 6%, respectively, while Barclays was hit hardest, seeing its shares plummet by almost 6%. The pan-European banking industry took a significant hit, with €37.4 billion (£32 billion) lost in value.
The jitters started on Wall Street the previous day when two US regional banks announced they had been exposed to millions of dollars' worth of bad loans and alleged fraud. Zions Bancorporation, a Utah-based lender, said it would write off $50 million on two loans, while Western Alliance Bancorp reported that it had started legal proceedings over a bad loan valued at $100 million.
Shares in both banks plummeted by more than 10% and 9%, respectively, sending shockwaves through the markets. Analysts warned of a domino effect, citing the collapse of Silicon Valley Bank last year as a precedent for potential credit quality issues after years of high interest rates and private credit expansion.
"This was an ostensibly isolated story at two banks each with less than a $10 billion market cap," said Jim Reid, an analyst at Deutsche Bank. "The event drew inevitable comparisons to the regional bank stress that followed the collapse of Silicon Valley Bank in 2023... raised broader questions over potential credit quality issues."
As markets grew increasingly volatile, investors turned to safe-haven assets like gold, which surged to a record high of $4,378 (£3,262) an ounce, its biggest gain since the 2008 financial crisis. The VIX index, a measure of market volatility, surged by over 22% on Thursday and rose another 6% on Friday morning.
With the US banking industry under scrutiny, investors are growing increasingly concerned about lending practices and credit quality issues. Jamie Dimon, JP Morgan's CEO, earlier warned that more "cockroaches" could emerge after the collapse of Tricolor and First Brands, two companies that filed for bankruptcy in recent weeks over creditor concerns.
The turmoil in the markets has raised questions about the resilience of the US economy and the impact on global stocks. As investors struggle to gauge the extent of the damage, one thing is clear: the outlook for world markets looks increasingly uncertain.
. This banking crisis is getting SO intense! 
Like, what's going on with these US regional banks, right? One minute they're fine, next they're exposed to bad loans and now their stocks are tanking 
.
! It's like a domino effect - when one bank falls, another gets worried and starts to panic too 
.
. Like, if you're looking for safe-haven assets, gold is the way to go 
. But seriously, what's going on with lending practices? Is this really a sign of a bigger problem in the US economy? 
. Anyone else got their format game on point today? 
and when it happens, expect massive wipeouts in stocks like we're seeing now 
the vix index is just the beginning... the real carnage is yet to come 
. The market is super volatile, and I'm not surprised they're turning to gold as a safe-haven asset 
. What if the US economy takes a hit from all this instability? It's getting pretty uncertain out there 
guess investors are just trying to hedge their bets or something? 
.
. I'm not surprised by all these regional banks freaking out, but it's starting to look like a domino effect 
. First Silicon Valley Bank, now these two US banks... it's like the whole system is just waiting for something to go wrong 
just says it all - we're in trouble, folks.
we need to be careful here, don't wanna see a domino effect and things getting any worse 
! Like, we're talking record high on gold too... 
️
Safe-haven assets, right? But what about the rest of us poor souls who can't just stash our money under a mattress and be done with it 
i mean, what's next? are we gonna see a wave of tech bankruptcies or is this just some weird banking thing that's got nothing to do with the rest of us 
the whole pan-european banking industry is getting crushed too, nearly 37 billion euros wiped off their value that's insane! 
i'm trying to stay calm but honestly it feels like we're staring into the abyss right now... gold prices are going through the roof though, a record high of $4,378 an ounce, maybe that's something safe-haven assets can do for us 
. Don't be surprised if this is just the tip of the iceberg 
. Those US regional banks were just testing the waters, and now it's gonna get messy 
. We're talking domino effect here, folks 
. The US banking industry needs to get its act together, pronto!
. anyway, with europe and usa banking on shaky ground, i'm kinda worried about the economy 
. Guess people are looking for safe havens in times of uncertainty. But let's be real, this just makes me wonder when the next shoe will drop 
.
.
. Has anyone else been feeling this way about the markets lately? 
. We're not out of the woods yet...
. it's like the domino effect, u feel? analysts say its like silicon valley bank collapse all over again, so yeah no thanks to the volatility 
, but i'm not sure if that's a sign of hope or just a safety net