European banks were rocked by another turbulent session on Wednesday, plunging as much as 10% amid concerns over the global fallout from the collapse of Silicon Valley Bank last week and the dramatic fall of Credit Suisse, which lead to several bank stocks, including Credit Suisse, being temporarily halted from trade.
Shares from Switzerland’s second-largest bank, Credit Suisse, dropped more than 25% to a new all-time low after the company’s main shareholder, the Saudi National Bank, announced they could not shore up their investments in Credit Suisse, citing regulatory concerns.
This latest development is another blow to the group, which has been plagued by a series of financial scandals.
European indexes tumbled on weakness from banks. France’s CAC 40 dropped 3.5%, and Germany’s DAX lost 3%. The FTSE 100 in London fell 3.1%.
Wall Street opens with stocks falling
Stocks are tumbling on Wall Street Wednesday as worries about the strength of banks worsen on both sides of the Atlantic Ocean.
At the open, the Dow Jones Industrial Average fell 1.51%, while Nasdaq slid 1.20%, and S&P 500 1.39%
Bank stocks have already been shaken following the collapse of Silicon Valley Bank. The historic failure triggered panic despite unprecedented intervention from the US authorities to contain spillovers and reassure the markets. President Joe Biden and regulators have tried to assure the public that risks were contained and deposits in other banks are safe.
The heaviest losses were focused on smaller and mid-size banks, which are seen as more at risk of having customers try to pull their money out en masse. First Republic Bank sank 7.7%, a day after soaring 27%. Huntington Bancshares dropped 5.7%
Larger banks weren’t hit as hard but still fell. JPMorgan Chase slid 3.6%.
Banks have struggled for the better part of the year as higher interest rates have fewer people and businesses taking out loans, part of the Federal Reserve’s goal as it tries to cool the economy and bring down four decades of high inflation.
Investors fear the Fed might respond to enduring upward pressure on prices by speeding up the pace of interest rate increases to dampen economic activity and inflation.