Banking fears spread across global markets

NEW YORK: The US' Dow opened the day with a decline of more than 600 points Wednesday as banking fears spread across global markets, reports said.

The S&P and Nasdaq slipped roughly 2 per cent and 1.5 per cent, respectively, CNN reported

Shares of embattled Swiss lender Credit Suisse were down by more than 20 per cent after its biggest shareholder chose not to increase funding. That comes after the bank cited "material weakness" in its financial reporting Tuesday and got rid of executive bonuses, CNN reported.

Shares of US banks also fell: Wells Fargo was down 4.9 per cent and JPMorgan Chase stock dropped 3.6 per cent.

Wall Street continues to grapple with banking tumult domestically, after the collapse of Silicon Valley Bank and Signature Bank rocked markets last week and early this week. While stocks recouped some of their losses on Tuesday, investors remain wary of the banking fallout and what it means for the Federal Reserve's interest rate-hiking campaign going forward and the overall stability of the financial sector.

Just as the panic over the US banking system appeared to fade, a fresh burst of anxiety blew in from Europe, CNN reported.

Credit Suisse shares crashed more than 20 per cent in Zurich, dragging down European bank stocks along with it. US stock futures fell Wednesday morning after rallying strongly on Tuesday.

"Credit Suisse has been a slowing-moving car crash for years," wrote Peter Boockvar, chief investment officer of Bleakley Financial Group, as per CNN. "But now today's news of course is happening in the vortex of SVB."

The "global bank psychology" is already fragile, Boockvar said. Investors around the world were thoroughly rattled by the collapse of Silicon Valley Bank and Signature, making the banking sector particularly vulnerable to any signs of trouble.

Shares of several top European banks have been halted Wednesday as the fallout from Credit Suisse's crisis of confidence spilled out throughout the sector, CNN reported.

French and German banks such as BNP Paribas, Societe Generale, Commerzbank and Deutsche Bank were falling, CNN reported.

Several bank stocks were halted, triggering automatic circuit breakers designed to give investors a breather and prevent stocks from rapidly collapsing.