Jitters over the US private credit market sent shockwaves across the Atlantic, causing European stock markets to tumble. The FTSE 100, Germany’s Dax, and Italy’s FTSE Mib all fell, led by a steep decline in banking stocks.
The anxiety stemmed from two US regional banks, Zions and Western Alliance, which reported significant exposures to bad loans. This sparked a sell-off on Wall Street that continued into the European and Asian sessions.
The pan-European banking sector lost €37.4 billion in value, with shares of major banks like Barclays and Deutsche Bank plunging. This raised fears of a domino effect, especially following other recent credit-related bankruptcies.
The market turmoil fueled a “wall of worry,” sending investors fleeing to safe havens. Gold prices hit an all-time high of $4,378 an ounce. The VIX “fear index” also surged, signaling a sharp rise in investor uncertainty.