Investors grapple with ‘frantic Friday’ as bank stocks tumble
Investors suffered a roller-coaster ‘frantic Friday’ amid a cocktail of global concerns that threaten to sour the buoyant appetite for global stocks.
Fears over US regional banks took centre stage, adding to a tinder box of worries, including America’s on-off trade war with China and concerns of an artificial intelligence (AI) bubble.
That sparked a sell-off on Wall Street late on Thursday – which was reflected in London and European financial capitals when markets opened yesterday.
The FTSE 100 slid by more than 150 points, or 1.7 per cent, in early trading. Germany’s Dax lost more than 2 per cent and France’s Cac 40 dropped by more than 1 per cent.
Stock markets later partially recovered when US President Donald Trump stepped back from a threatened 100 percentage point tariff hike on China, saying it was ‘not sustainable’. In London, the Footsie clawed back some of the ground it lost, but still closed down 0.9 per cent, or 81.52p, at 9354.57. New York indices climbed, however.
Banking stocks were in the doldrums, with £11bn wiped off the combined value of the big UK-listed lenders.
Fears: Investors suffered a roller-coaster ‘frantic Friday’ amid a cocktail of global concerns that threaten to sour the buoyant appetite for global stocks
And underlying worries remain. Recent warnings, including from the Bank of England, suggest US tech stocks that have led a global market boom may be wildly overvalued.
At the same time, a US government shutdown shows no signs of ending while France’s government is in turmoil and UK households and firms are awaiting a painful Budget next month.
James Smith, economist at ING Bank, said: ‘As we stumble into the weekend, the straws in the wind are blowing ominously.’
Boost: Donald Trump stepped back from a threatened 100 percentage point tariff hike on China
Smith pointed to worries about regional banks, strains in US funding markets and concerns about the role of opaque private credit markets, on top of tariff fears.
Chris Beauchamp, chief market analyst at broker IG, said: ‘It was all set to be another frantic Friday for markets as a US regional bank crisis appeared on the horizon, but comments from President Trump have once again lifted equities off their lows.’
The latest volatility was sparked by the woes of two US banks, Zions and Western Alliance, which both revealed problems related to a series of loans.
It adds to the scrutiny of lending after other banks were caught up last month in the collapse of car parts supplier First Brands. In London, it was banking stocks that suffered, with Barclays down nearly 6 per cent, Lloyds and HSBC off by more than 2pc and NatWest losing around 3 per cent, while Standard Chartered fell 3.5 per cent.
Deutsche Bank plummeted 6 per cent, Swiss giant UBS fell more than 3 per cent and France’s Societe Generale shed 5 per cent.
Even gold, having hit a peak of more than $4,378 per ounce, fell back close to $4,200.
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