European Stock Exchanges Bear the Traces of the U.S. Banking Crisis

US Banking Crisis Creates Global Market Unease

Negative news from regional banks in the US has caused a significant upheaval in global equity markets. The announcements from banks like Zions Bancorp and Western Alliance of detecting fraud have raised concerns about a new banking crisis.

Impact of Bad News: European Markets in Decline

Utah-based Zions Bancorp announced on October 15 that it had detected irregularities related to two commercial loans and incurred a $50 million loss. These developments have unsettled investors worldwide and adversely affected European markets. The Stoxx Europe 600 index fell 0.91%, closing at 566.48 points.

Sector-wide Decline Gathers Pace

The technology index in Stoxx Europe 600 lost 0.82%, while the banking index declined 2.42%. The FTSE 100 index in the UK fell 0.86% to 9,354.57 points, the CAC 40 index in France dropped 0.18% to 8,174.2 points, and Italy's FTSE MIB 30 index decreased 1.45%, closing at 41,758.11 points. Germany's Dax 40 index closed down 1.76% at 23,845.41 points.

Bank Stocks Decline, BBVA Creates Opportunity

European banking stocks saw declines, with shares of Barclays and Deutsche Bank dropping over 5%. Meanwhile, shares of the Spanish bank BBVA rose by more than 5% after its attempt to acquire Sabadell was unsuccessful.

Concerns About 2023 Crisis Resurface

Analysts note that investors are caught unprepared by developments in the US banking sector. The uncertainty created by the Silicon Valley Bank crisis has resurfaced, with QC Partners portfolio manager Thomas Altmann stating, "Fear of a new crisis has returned."

Gold Prices on the Rise

The increasing risk perception in global markets has also had an upward impact on gold prices. The price of gold per ounce rose to $4,379.4, setting a new record. Investors are observed to be turning to gold as a safe haven amidst growing geopolitical uncertainties and trade tensions. Furthermore, gold has gained over 61% in value since the beginning of the year.