Credit quality has become the market’s primary focus as stocks tumbled worldwide and gold soared to a record high. The shift was triggered by two US regional banks reporting significant bad loans, raising fears of wider stress after a long period of high interest rates.
Zions Bancorporation and Western Alliance plunged after announcing $150 million in combined write-offs and bad loans. This sparked a global sell-off, with bank stocks bearing the brunt. The pan-European banking sector lost €37.4 billion in value.
Major indices from Asia to Europe, including the Nikkei, Hang Seng, FTSE 100, and Dax, all fell. Analysts drew “inevitable comparisons” to the SVB crisis, warning that these incidents might not be isolated.
The market’s “fear index,” the VIX, surged over 22%. In a classic flight to safety, investors dumped equities and poured into gold, which hit a new all-time high of $4,378 an ounce.