Analysts are warning of “storm clouds gathering” over markets as a sell-off in bank stocks accelerated, wiping billions off global indices. The rout began after two US regional banks revealed significant credit losses, sparking fears of a wider economic slowdown.
The lenders, Zions Bancorporation and Western Alliance, reported $150 million in combined bad loans. This news, following other recent corporate bankruptcies, has turned investors’ attention to the underlying health of the economy after a period of high interest rates.
The banking sector was routed. In Europe, the industry lost €37.4 billion in value. Barclays shares plunged nearly 6%, while Deutsche Bank and Banco Sabadell also fell sharply. Asian and European stock indices all closed in the red.
The anxiety sent investors running for cover. Gold, a traditional safe haven, hit a new record high of $4,378 an ounce. The VIX volatility index, the market’s “fear gauge,” surged to its highest level since April.