A massive flight to safety gripped financial markets, sending gold soaring to a new record of $4,378 an ounce while bank stocks crumbled. The panic was triggered by emerging signs of credit stress at US regional banks.
Two lenders, Zions Bancorporation and Western Alliance, revealed a combined $150 million in bad loans and write-offs. This news, though seemingly small, sparked a global sell-off over fears of wider, hidden problems in the private credit market.
Bank shares were hammered. In Europe, Barclays, Deutsche Bank, and Banco Sabadell fell around 6% each, wiping €37.4 billion from the sector’s value. Stock indices in London, Frankfurt, Paris, Tokyo, and Hong Kong all dropped significantly.
The market’s “fear index,” the VIX, surged over 22%, its highest close since April. The developments revived painful memories of the 2023 SVB collapse, with analysts warning that “storm clouds are gathering.”