The global banking sector bled billions in market value as jitters over US credit quality spread rapidly across continents. The pan-European banking industry alone lost €37.4 billion, with Barclays, Deutsche Bank, and Banco Sabadell all plunging by 6% or more.
The panic was sparked by two US regional lenders, Zions Bancorporation and Western Alliance, which reported a combined $150 million in bad loans and write-offs. This fueled heavy losses on Wall Street, which then infected Asian and European markets.
Stock indices from Tokyo to London fell. Japan’s Nikkei dropped 1.6%, and Germany’s Dax fell 1.8%. The broad sell-off was accompanied by a surge in fear, with the VIX volatility index spiking over 22%.
Analysts warned of a “domino effect,” as the news followed other recent credit-related bankruptcies. Investors, fearing the worst, rushed into safe-haven gold, pushing its price to a new all-time high.
