Investors ran for cover, pushing gold to a new record high and causing the VIX “fear index” to surge, as new fears about the US banking system emerged. The panic was sparked by bad loan disclosures at two regional lenders.
Zions Bancorporation and Western Alliance revealed a combined $150 million in credit issues, sending their stocks plunging. This news triggered a global sell-off, with bank stocks leading the decline.
European markets were hit hard. The FTSE 100 and Germany’s Dax fell, while the pan-European banking sector lost €37.4 billion. Asian markets, including the Nikkei and Hang Seng, also closed deep in the red.
The episode revived memories of the 2023 SVB collapse, with investors now questioning the underlying health of the economy. The surge in gold to $4,378 an ounce marked its best week since the 2008 financial crisis.