Closing summary
After a calm start to the day, with share gains in Asia and Europe, there was a renewed sell-off in banking shares in Europe and the US.
As fears of a wider banking crisis spread, European banking shares tumbled, with the Euro Stoxx banks index down 3.5%. ING and Commerzbank both lost 5%, BNP Paribas shed 4.2% and Deutsche Bank fell 3%. European stock markets slid between 1% and 1.7% as a result.
US banking shares also sold off, including Goldman Sachs, JPMorgan Chase and Morgan Stanley, with regional banks hardest hit.
The parent of Silicon Valley Bank, which was taken over by Californian regulators a week ago, today filed for a court-supervised reorganisation under Chapter 11 bankruptcy protection to seek buyers for its assets. SVB last Friday was the first domino to fall, followed by New York’s Signature Bank on Sunday.
Wall Street’s biggest lenders teamed up yesterday to rescue First Republic Bank after its shares crashed, pumping $30bn (£25bn) into it, but First Republic shares slumped 26% today.
In Europe, Credit Suisse has lurched from crisis to crisis, and the Swiss National Bank was forced to offer a £44.5bn lifeline to Switzerland’s second-biggest bank. Although there are specific problems at SVB and Credit Suisse, there is evidence of wider distress in the banking system. Credit Suisse shares have tumbled a further 10% today.
As clients withdraw their cash at a dizzying pace, net outflows from Credit Suisse’s US and European managed funds topped $450m between Monday and Wednesday, the data firm Morningstar Direct estimates.
Here’s an explainer on what’s going on in markets and whether there’s going to be another global crisis.
Our other main stories today:
Thank you for reading. Have a great weekend. Good-bye! – JK
Updated
Andrew Hunter, deputy chief economist at Capital Economics, has looked at the US industrial production data, out earlier today.
The February industrial production data were marginally stronger than we had expected, with manufacturing output rising by a further 0.1% following the earlier 1.3% month-on-month surge in January. But with the surveys going from bad to worse and given the risks from the turmoil in the banking sector, we suspect that further declines in manufacturing activity still lie in store…
Although the recent resurgence in manufacturing activity in China presents an upside risk to the near-term US manufacturing outlook, that boost could yet be offset by a loss of business confidence and tighter credit conditions. The latest domestic surveys, including the March Empire State and Philly Fed indices released this week, support the idea that renewed declines in manufacturing output are likely over the coming months.
