Eyebrow Raise as Global Markets Plummet
Stock markets recovered on Tuesday when it appeared that the panic was subsiding, but on Wednesday, they fell as worries among investors about the state of the banking industry spread around the world.
At the start of trading, the S&P 500 on Wall Street dropped 1.6%, wiping out all of the gains from the previous day.
Although there are still concerns about the effects of Silicon Valley Bank‘s and Signature Bank‘s failures, which were taken over by regulators after suffering devastating runs on deposits, European markets were also severely impacted, with stocks of many of the region’s top banks experiencing sharp declines.
Customers gradually started moving their money to other institutions, which appeared to be the main reason of the day’s turmoil at the Swiss bank Credit Suisse, which has been working hard to turn around its fortunes for years. With its shares falling more than 30% and breaking yet another record low, it underwent the most jarring collapse.
The bank’s largest shareholder, Saudi National Bank, announced on Wednesday that it will not give Credit Suisse any additional money as the company struggles with its most recent turnaround plan.
As the price of the banks’ bonds fell, the cost of protecting their debt from a potential default rose considerably.
Neither they nor any other European banks were subject to the same risks as Silicon Valley Bank or Signature Bank, according to a statement made on Tuesday by S&P Global Ratings.
Shares of midsize regional banks in the United States started to decline once more following Silicon Valley Bank’s liquidation.
First Republic Bank experienced a 24% decline, PacWest a 14% decline, Western Alliance a 7% decline, and Zions Bank experienced a more than 5% decline.
A little amount of damage was also done to the largest banks, with shares of JPMorgan Chase and Bank of America plunging by more than 3% each.
As a result of the loss in the American stock market brought on by the failure of two U.S. banks, the stock market in Asia plummeted on Tuesday, according to earlier reports in the international media sector.
Voice of America reports that the Nikkei 225 Index for Japan fell 2.3%, with shares of Softbank plunging 4.1%, Mizuho Financial Group falling 7.1%, and Sumitomo Mitsui Financial Group falling 9.8%. Additionally, on Tuesday, the Hong Kong Hang Seng Index fell by 2.4%.
