Asian markets tumbled, with Japan’s Nikkei 225 falling 1.6% and the Hang Seng in Hong Kong dropping 2%, as credit stress from the US banking sector spread across the globe. The losses followed a heavy sell-off on Wall Street.
The turmoil was ignited by disclosures from two US regional banks, Zions Bancorporation and Western Alliance, which revealed $150 million in combined bad loans and write-offs. This news raised alarms about the impact of high interest rates on credit quality.
European markets followed Asia’s lead, opening sharply lower. The FTSE 100, Dax, and Cac 40 all fell, with the banking sector taking the biggest hit. Barclays, Deutsche Bank, and other major lenders saw their shares drop significantly.
The episode sparked comparisons to the 2023 SVB crisis, fueling a flight to safety. Jittery investors pushed gold to a new record high of $4,378 an ounce. The VIX “fear index” also surged, underscoring the high level of investor anxiety.