Closing post
Time to wrap up…
European and Asia-Pacific stock markets have had a bruising day after concerns over the health of the US regional banking sector added to anxiety levels in the markets.
Britain’s FTSE 100 index shed 0.86%, or 81 points, having been down as much as 150 points this morning.
Across Europe, Germany’s DAX fell by 1.8% and France’s CAC 40 lost 0.2%.
European bank stocks were hit, with an estimated €37bn wiped off the European banking sector. That included almost £11bn knocked off the biggest banks listed in London.
The losses were triggered by two US regional banks, Western Alliance Bank and Zions Bank, who yesterday disclosed alleged fraud by borrowers.
Those disclosures fuelled fears that more problems may be lurking, as Stephen Innes, managing partner at SPI Asset Management, explains:
Zions’ $50 million charge-off on two supposedly clean commercial loans might sound modest in isolation, but isolation is precisely the problem. Every time one of these “isolated incidents” pops up, the market remembers the old trader’s adage: there’s never just one cockroach in the kitchen.
And sure enough, Western Alliance’s $100 million legal tangle suggests the infestation might be spreading.
Court filings, cross-exposures, NDFI lending webs—suddenly, every regional’s loan book looks like an attic filled with old wiring and a faint smell of smoke.
Wall Street, which fell yesterday, has been calmer today – after Donald Trump backed away from his threat to hit China with 100% tariffs in their rare earths dispute
Trump told Fox News that the proposed 100% tariff on goods from China was not sustainable, adding that he plans to meet Chinese president Xi Jinping in two weeks.
Trump told Fox Business Network:
“It’s not sustainable, but that’s what the number is.
They forced me to do that.”
Updated
As the International Monetary Fund’s annual meeting draws towards a close, the Fund is facing critisim from indigenous leaders in Ecuador.
The leaders are blaming the IMF policies for the current in Ecuador crisis, where protests have been taking place for several weeks over the government’s decision to cut diesel subsidies.
In a letter to IMF chief Kristalina Georgieva, a group of indigenous organizations explain that the government of Ecuador has frozen indigenous bank accounts without warning and without any explanation.
And they insist they will continue to protect Ecuador’s forests from oil and mining projects, saying:
Two months earlier, your government partner opened new licensing rounds for oil companies to drill in those same territories. With the banking crackdown, the message is clear: they had to freeze our money before they could open our lands.
You should understand what this means, Ms. Georgieva. When a government freezes Indigenous Peoples bank accounts without due process, it shows the same arbitrary power it will use against investors when contracts become inconvenient. We have defended these forests for thousands of years, through Spanish Conquest, through 50 years of oil contamination, through military repression. We expelled military and oil companies when they attempted to drill oil in the early 2000s and then we won in the courts in 2012. We again stopped oil auctions in the courts in 2019. We mobilized hundreds of thousands in 2022 against your economic policies and we won. We got the support of all Ecuadorians in keeping oil in the ground during the Yasuní referendum in 2023. Now your IMF loans demand Ecuador extract more oil to repay debt, so the government must silence us first. But freezing bank accounts doesn’t freeze resistance: it proves our movement threatens their plans. The last 20 years of victories shows that.
Bank of England's Greene sees no case for quarterly rate cuts
Over in Washington DC, Bank of England Monetary Policy Committee member Megan Greene has said she did not see a case for the BoE to continue its current quarterly pace of rate cuts.
However, Greene doesn’t think the rate-cutting cycle is over – Bank rate is currently 4%, having been cut five times since summer 2024.
Greene, speaking at an event hosted by the Atlantic Council think tank in Washington, said a rise in British unemployment reported on Tuesday was in line with her expectations, and reduced the chance of high inflation translating into a wage-price spiral, Reuters reports.
Another US regional bank, Fifth Third Bancorp, has tried to reassure investors about its financial health today.
Fifth Third said it expects its net charge-off ratio to fall in the fourth quarter in a sign that its seeing less trouble ahead for its loan portfolio, Marketwatch reports.
Last month, Fifth Third had reported it faced a loss of up to $200m due to suspected fraud on two loans.
€37bn wiped off the European banking sector
Financial stocks across Europe were also dragged down by fears over bad loans at U.S. regional banks.
The warnings from Western Alliance Bank and Zions Bank that they were exposed to alleged fraud by borrowers hit European banks broadly today.
Spain’s Banco Sabadell fell by 6.78%, followed by Germany’s Deutsche Bank which shed 6%.
Overall, more than €37bn was wiped off the European banking sector, as measured by the Stoxx 600 banks index (which includes the UK banks whose falls we covered a few minute ago). That index fell by 2.4% today.
While €37bn obviously a large number, the market capitalisation of the whole is €1.55 trillion, according to LSEG data.
Nearly £11bn knocked off UK bank valuations today
Nearly £11bn has been wiped off the value of the largest banks listed in London today.
Banks were among the big fallers in today’s sell-off, with Barclays down 5.66%, NatWest losing 2.88%, HSBC down 2.5%, Standard Chartered losing 3.5% and Lloyds Banking Group off 2.4%.
By my maths, that knocks £10.8bn off the combined value of those five banks, as anxiety over US regional banks swept the sector yesterday.
Joe Mazzola, head trading & derivatives strategist at Charles Schwab, explains:
Bank earnings took on new importance today after credit concerns sent [US] regional bank shares down 6% Thursday and spooked the market two weeks before Halloween.
Stocks clawed back from their worst overnight losses after several regional banks reported solid results and CNBC reported that Treasury Secretary Scott Bessent will speak with his Chinese counterpart today on trade.
Recent bankruptcies of two firms serving the auto industry raised questions about banks’ lending practices, leading to double-digit drops yesterday for shares of two banks that confirmed exposure to fraudulent loans.
FTSE 100 index closes down 0.87%
Newsflash: The UK’s stock market has recorded its joint-biggest one-day fall in a month.
After a bruising day of trading, the FTSE 100 index of blue chip shares has closed down 81.5 points at 9354 points, a drop of 0.86%.
That’s the Footsie’s biggest percentage fall since mid-September, and also matches its losses last Friday when the US-China trade war exploded back into life.
Precious metal miner Fresnillo (-10.5%) was the top faller, followed by Barclays (-5.6%) and asset manager ICG (-5.3%).
The chairman of NatWest bank, Rick Haythornthwaite, has said he doesn’t see any ‘flowback’ from US regional bank problems, Reuters reports.
James Reilly, senior markets economist at Capital Economics, predicts the markets will shake off their worries about the US regional banking sector quickly, telling clients:
Although the dramatic fall in the share prices of US regional banks has sparked memories of the 2023 mini banking crisis, the backdrop is very different this time.
We don’t think these jitters are likely to prevent the stock market rallying for long.
Precious metal miners have joined the banks as the big stock market fallers in London today.
With the sell-off more muted, the fallers are being led by Fresnillo (-7.3%), with Endeavour Mining (-5.8%) not far being. They’re being hit by the fall in gold and silver prices today.
Asset manager ICG (-5.7%) and bank Barclays (-4.1%) are also in the top fallers, even though the US regional banking panic seems to have eased….
Wall Street has now turned positive, with the Dow Jones Industrial Average, the S&P 500 and the Nasdaq share indices all up around 0.25%.
American’s views on the economy turned more negative in the third quarter with deepening concerns about jobs, inflation and the outlook, a new survey has found.
The CNBC All-America Economic Survey has found that president Donald Trump’s net approval rating on the economy fell, with 42% approving of his handling of the economy and 55% disapproving.
The -13 net approval on the economy is the lowest of any CNBC survey during either of Trump’s two terms.
Trump's approval rating on the economy takes hit because of shutdown, inflation, CNBC survey finds https://t.co/rcAf8vjTOU
— CNBC (@CNBC) October 17, 2025
Gold and silver slide from record highs
Precious metals prices are falling, after their recent surges to record highs.
Spot silver is down over 3% today at $52.49 per ounce.
And gold, which hit a new peak this morning, is now down 2% at $4,234 per ounce.
Updated
Zions and Western Alliance shares open higher
Shares in the two US regional banks that sparked yesterday’s sell-off are rising slightly in early trading.
Zions Bancorporation are up 4.6%, while Western Alliance Bancorporation has gained 2.8%.
Yesterday, Zions fell by 11% after it revealed it faced a $50m charge-off over two bad loans.
Western Alliance was down over 10% on Thursday after saying it was dealing with a fraudulent borrower.
Wall Street opens slightly lower
DING DING rings the opening bell of Wall Street, starting a new day’s trading.
And stocks are dipping slightly, although it’s certainly not the slump we saw in Europe or Asia-Pacific markets earlier today.
The S&P 500 share index, which is a broad measure of the US stock market, has dropped by 17 points or 0.26% at the start of trading, to 6,611 points.
The technology-focused Nasdaq index has dropped by 0.43%.
But the Dow Jones industrial average has bucked the trend; this index of 30 large US companies has risen by 21 points or 0.05% to 45,973.49.
While investors remain concerned about the situation in the US regional banking sector, there may also be relief that Donald Trump has said his meeting with China’s Xi Jinping is still on.
Trump says 100% tariffs on China not sustainable
US president Donald Trump has said today his proposed 100% tariff on goods from China would not be sustainable.
He added that he would meet with Chinese president Xi Jinping in two weeks and that he thought things would be fine with China.
In comments that seem to have reassured investors, Trump told Fox Business Network:
“It’s not sustainable, but that’s what the number is.
They forced me to do that.”
Reminder: this 100% tariff was threatened a week ago, when the US was unhappy about new restrictions on China’s rare earth exports.
Updated
The London stock market is continuing to scramble back from its earlier lows, as the City awaits the opening of Wall Street in around 40 minute time.
The FTSE 100 index of blue-chip shares is now down 86 points, or 0.9%, at 9,350 – having fallen as low as 9,276 points this morning.
Indications that the US market may open pretty calmly are helping the mood in London.
Eamon Javers, CNBC’s Senior Washington Correspondent, reports that US treasury secretary Scott Bessent and Chinese Vice Premier He Liefeng will discuss trade negotiations by phone today.
He adds:
I don’t have details on timing or content of the call, but it’s notable that it is happening.
I’m told that Treasury Secretary Scott Bessent and Chinese Vice Premier He Liefeng will speak by phone today to discuss the ongoing trade negotiations between the United States and China.
— Eamon Javers (@EamonJavers) October 17, 2025
I don’t have details on timing or content of the call, but it’s notable that it is…
If the call is constructive, it could calm some worries over the state of the trade talks….
Updated
Weaknesses in the US regional banking sector are just the latest in a list of issues for investors to worry about.
As Bob Savage, head of markets macro strategy at BNY, explains:
Today’s market reaction isn’t just a US story: in China, bonds have rallied while CNY and stocks are both down going into the weekend, as the market waits for the next plenum and further economic policy shifts. Japan faces a 50-50 moment in which the LDP may not win the prime ministership, while megabanks in the country are allowed to issue stablecoins for business use.
The global demand fears are also driving energy: oil is off 1%, with the key $60/barrel Brent mark in sight. In Europe, the focus is on defense shares and plans for a Putin/Trump meeting after today’s Zelenskyy/Trump meetings. EU drug maker shares are also in focus following Trump’s vows to cut weight-loss drug prices.
The US stock market futures are paring their earlier declines – a sign that Wall Street will not fall as sharply as feared.
S&P 500 fuures are now down 0.3%, Nasdaq 100 futures are down 0.6%, while the Dow Jones Industrial average is only facing a 0.1% drop.
Asset managers among FTSE 100 fallers
City traders are catching their breath after one of the most testing morning sessions of recent months.
The FTSE 100 share index is now down 120 points, or 1.27%, so it’s clawed back a little of its earlier losses.
Barclays remains the biggest faller in London, down 5.7%, as worries about problems in the US regional banking setor continue to ripple out….
But it’s now accompanied by several asset managers: ICG are down 5.4%, while Schroders has lost 4.6% and St James’s Place is down 3.7%.
Kathleen Brooks, research director at XTB, says fears of a credit bubble are dominating the markets today:
It’s a volatile end to the week, stocks are a sea of red in Europe and Asia, and US equity market futures are pointing to another day of hefty losses for stock indices across the pond.
The selloff has been caused by fears about the private credit market. What started as concerns about two bankrupt companies, First Brands and Tricolor, and the impact on private lenders, has now broadened out to concerns about US regional banks after Zions Bancorp and Western Alliance both said that they would suffer losses due to fraudulent loans.
The dash into government bonds today means Germany’s borrowing cost are heading for their biggest weekly drop since late March.
Reuters has the details:
Germany’s 10-year Bund yields, the bloc’s benchmark, were down 2 basis points (bps) at 2.58%, after hitting 2.523%, the lowest since June 25.
They were set to end the week 9 basis points lower, which would be the biggest drop since the final week of March, when yields fell sharply amid concerns over the deflationary impact of U.S. tariffs.
Huw Pill added that the Bank of England would take into account the policies announced in Rachel Reeves’s November budget at its December monetary policy meeting.
Asked by the Guardian whether the upcoming UK budget risks impact inflation persistence or economic weakness, the BoE’s chief economist said the Bank’s decisions were based on announced policy measures.
Pill says:
“The budget is an important issue but it’s not the only issue.”
Bank of England chief economist urges caution over interest rates cuts
The Bank of England chief economist has warned interest rates should be kept higher for longer amid growing fears over stubbornly high inflation.
Huw Pill said inflation was proving stickier than Threadneedle Street had anticipated, in a “wicked problem” facing the UK economy as households and businesses come under pressure from fast-rising prices.
Speaking at a conference in London held by the Institute of Chartered Accountants in England and Wales, he said:
“The need to recognise the stubbornness of inflationary pressures is becoming more pressing.”
Headline inflation is running at 3.8%, almost twice the Bank’s 2% target. Threadneedle Street expects the measure to reach a peak of 4% this autumn, driven by a sharp rise in food prices. Official inflation figures for September are due to be released next week.
In a possible hint that he would vote to keep rates on hold at the Bank’s next policy meeting in November, Pill said: “from this point forward, a more cautious pace in withdrawing monetary policy restriction.”
The Bank’s monetary policy committee will hold its next vote on rates on 6 November, three weeks before chancellor Rachel Reeves’s autumn budget.
Suggesting that the Bank would need to be alive to shocks, Pill suggested he was prepared to keep rates on hold for longer, or to cut borrowing costs if required. Bank rate has been cut five times since August 2024 to the current level of 4%.
He added:
“While I would expect further cuts in Bank Rate over the coming year should the economic and inflation outlook evolve broadly as the MPC expects, it will continue to be important to guard against the risk of cutting rates either too far or too fast.”
Bitcoin lowest since June as selloff deepens
Bitcoin is also caught up in today’s sell-off.
The world’s largest crypto asset has dropped by 3.8% so far today to $103,738, its lowest level since late June.
🚨#BITCOIN JUST DROPPED BELOW $104,000!! pic.twitter.com/wORdMWLe5b
— Coin Bureau (@coinbureau) October 17, 2025
This is its fourth daily decline in a day, as bitcoin has fallen back from the record high of $126,223 reached early this month.
Simon Peters, crypto analyst at eToro says
“Markets across the board are in risk-off mode amidst growing concerns in the US regional banking sector and stress in broader credit markets.
“In crypto markets specifically, with the bitcoin price slipping below the recent $108,000 support level, this seems to have caused a degree of liquidations in the bitcoin perpetual futures market, to the tune of $147 million at time of writing - according to Coinglass data - which is adding to the downward pressures and exacerbating the decline.
“More speculative altcoins are seeing greater declines, down over 10% in some cases. We are looking now to the $100,000 level on bitcoin as a potential support. If the concerns in the US regional banking sector are isolated and not a systemic risk, we could see a bounce as investors buy the dip.
“An end of the government shutdown and a release of some favourable economic data from the US could also provide a short-term tailwind to prices. We wait to see.”
Fear index highest since April
Wall Street’s fear index has jumped this week, as worries grip the markets.
The VIX index, which tracks volatility in the markets, surged by over 22% yesterday to its highest closing level since April.
Updated
Our news story about the sell-off in the markets this morning:
Global stock markets fell sharply and gold hit a record high after two US regional banks said they had been left exposed to millions of dollars of bad loans and alleged fraud.
Signs of credit stress rattled markets across Europe and Asia. In London the FTSE 100 fell 1.5%, Germany’s Dax fell 2%, the Ibex in Spain was off 0.8% and France’s Cac 40 dropped 1.5%, before recovering some ground.
Concerns over credit stress in the network of loans to businesses across the world’s largest economy fuelled heavy losses on Wall Street on Thursday, followed by Asian markets, with Japan’s Nikkei 225 falling 1.6% and the Hang Seng in Hong Kong dropping 2%. US markets are expected to open down later on Friday.
Jittery investors turned to safe haven assets, with gold hitting a new record of $4,378 (£3,262) an ounce, a weekly gain of almost 8.5%, its biggest since the 2008 financial crisis.
More here:
Updated
AJ Bell: spooked investors fear a crisis is brewing.
Today’s selloff follows growing concern that a bubble was building in the markets.
But while a lot of the chat has been about the surging valuation of artificial intelligence companies, it’s the banking sector that triggered the drop in shares today.
Russ Mould, investment director at AJ Bell, explains:
“US banking stocks were notably weak yesterday as investors worried about exposure to bad loans. That spread to Europe on Friday, with Barclays, Standard Chartered, NatWest and HSBC all dragging the FTSE 100 down.
“Pockets of the US banking sector including regional banks have given the market cause for concern. Investors have started to question why there have been a plethora of issues in a short space of time and whether this points to poor risk management and loose lending standards. This includes Zions flagging an unexpected loss on two loans and Western Alliance alleging a borrower had committed fraud.
“The pullback in UK-listed banks will be sentiment-driven. Investors have been spooked and moved to trim positions in the sector, possibly opting to have lower exposure in case a crisis is brewing. There is no evidence of any issues with the London-listed core banking names, but investors often have a knee-jerk reaction when problems appear anywhere in the sector.
“However, investors are watching one London-listed name in the broader financials sector very closely. ICG, formerly called Intermediate Capital Group, was the biggest faller on the FTSE 100 as it has exposure to private credit and asset-backed finance.
Bond yields fall amid concerns about credit and regional banks
Government borrowing costs are falling today, as investors seek out the relative safety of bonds.
Prices of US Treasuries, and UK gilts, are both rising today, which pushes down the yield (the effective interest rate) on these bonds.
Falling UK yields are a boost to Rachel Reeves; lower borrowing costs will help the chancellor keep within her fiscal rules.
Gilt yields have been falling this week, as Reeves reiterated her commitment to controlling borrowing and hinted at tax rises for the wealthy.
But it does also appear that this week’s moves are driven by worries about problems lurking in the US private credit, and regional banking, sectors.
As Allianz’s chief economic advisor Mohamed El-Erian explains:
Of note, the yield on the 10-year US Treasury has fallen below 4% as credit concerns weigh on regional bank stocks (Bloomberg charts below). This follows warnings from Jamie Dimon, JP Morgan CEO, about credit “cockroaches”.
Of note, the yield on the 10-year US Treasury has fallen below 4% as credit concerns weigh on regional bank stocks (Bloomberg charts below). This follows warnings from Jamie Dimon, JP Morgan CEO, about credit “cockroaches.” #economy #markets #banks #credit @jpmorgan pic.twitter.com/soRHycQ9xa
— Mohamed A. El-Erian (@elerianm) October 16, 2025
Key word: credit cockroaches. 🇺🇸 https://t.co/2aLdYfYG5d
— Virginie Jacoberger-Lavoue (@VJacobergerL) October 17, 2025
Wall Street futures are down
Wall Street is heading for fresh losses when trading opens in New York.
The futures market shows that the S&P 500 share index is on track to drop by 1.2%, while the tech-focused Nasdaq 100 futures are down 1.4%.
Dow Jones Industrial Average futures are down 1% (the Dow contains 30 large US companies).
There could be larger losses among small companies. The futures contract for the Russell 2000 index (which tracks smaller listed companies) is down 2%.
European banking stocks tumble as US fears hit markets
It’s turning into a bad morning for European banks; an index which tracks the sector has fallen by 2.8% so far this session.
The fallers are being led by Banco de Sabadell (-6.2%), Deutsche Bank (-5.95%), and Barclays (-5.7%).
Chris Beauchamp, chief market analyst at IG, says
“It was an ugly session on Wall Street yesterday, as small gains gave way to an accelerating move to the downside on fears about the US regional bank system.
This feels like a rerun of 2023, but it comes as the market is struggling to digest the latest US-China trade spat and spells trouble in the short-term at least. Sentiment remains skittish, and the instinct will be to sell first and ask questions later.”
Elsewhere in the markets, Novo Nordisk’s shares have dropped 5.5% after Donald Trump said that the price of Danish drugmaker’s best-selling weight-loss drug would be lowered.
Trump made the comments during a White House event on fertility treatments and drug pricing. He was asked by reporters to identify the name of a drug that he earlier in the event said would be made less expensive.
Updated
UK stock market on track for worst day since April
As things stand, the FTSE 100 (now -147 points, or -1.57%) is on track for its biggest one-day loss since early April.
That was the week when Donald Trump triggered a market slump by announcing new tariffs on America’s trading partners.
Storm clouds are gathering over the financial markets, warns Richard Hunter, head of markets at interactive investor:
There are increasing signs of storm clouds gathering over markets, with little relief from the building wall of worry.
Already grappling with stretched stock valuations in the AI space, an unresolved government shutdown and a deteriorating relationship between Beijing and Washington, investors were exposed to a new source of concern in the form of lending practices and bad loans for US regional banks.
Of themselves, the credit losses announced by two regional banks were limited and seem to be contained. While there are hopes that this could be an isolated incident, the episode brought back unwelcome memories of the Silicon Valley Bank collapse in 2023 and, with several regional banks yet to report, investors are on high alert. Indeed, despite there being no obvious read across to the large banks, the reports were enough to put the skids under the sector as a whole, with losses of around 3% more or less across the board.
Almost every one of the hundred stocks on the FTSE 100 index is lower this morning.
There are just five risers, led by publisher Pearson (+2.9%) which reported sales growth this morning, and engineering firm Smiths Group (+1.3%) which sold an interconnect unit yesterday.
Updated
The UK stock market is continuing to slide.
Twenty minutes into trading, the FTSE 100 index is down 150 points or 1.6% at 9285 points, with financial stocks continuing to lead the fallers.
Fears are swirling today that we could be facing a repeat of the US regional banking crisis of 2023.
That episode led to the demise of US bank SVB and then Europe’s Credit Suisse.
As Jim Reid, market strategist at Deutsche Bank, told clients:
An initially positive risk mood turned during the US session yesterday after news that Zions Bancorp (-13.14%) made a $50m charge-off while Western Alliance (-10.81%) alleged it also suffered from fraud on loans to the same borrowers linked to distressed commercial mortgages.
While this was an ostensibly isolated story at two banks each less than $10bn market cap, the event drew inevitable comparisons to the regional bank stress that followed the collapse of SVB in March 2023 and raised broader questions over potential credit quality issues after a lengthy period of elevated rates and expansion in private credit, following also the bankruptcy of subprime auto lender Tricolor last month.
European stock markets have also dropped like stones at the open.
France’s CAC 40 has fallen 1.5%, Spain’s IBEX lost 1.2%, and German’s DAX has lost 1.9%.
FTSE 100 tumbles at the open amid US regional banking worries
The London stock market has fallen sharply at the start of trading, as investor confidence is rocked by fears over problems in the US regional banking sector.
The FTSE 100 index of blue-chip shares has tumbled by 131 points at the start of trading, a fall of 1.4%, down to 9304 points.
Banks are among the top fallers, with Barclays down 4.7%, Standard Chartered losing 4.3% and NatWest off 3.1%. Asset manager ICG has lost 5%.
Traders are alarmed that two US banks yesterday disclosed issues with bad and fraudulent loans, raising fears that more problems may be lurking in the sector.
This comes on top of rising fears about the private credit sector, with IMF chief Kristalina Georgieva admitting yesterday that this keeps her awake at night.
Derren Nathan, head of equity research, Hargreaves Lansdown, explains why markets are sliding, with Wall Street set for fresh losses:
US stock futures are down today, as credit concerns compound the jitters over an escalation in US-China trade tensions and the ongoing government shutdown in Washington. This comes after Wall Street closed lower on Thursday. Despite growing hopes of further rate cuts this year, attention is turning to the underlying health of the economy, as emerging credit losses amongst America’s regional banks raised further questions about lending practices.
That’s done little to calm jitters about contagion from the bankruptcy of auto parts supplier First Brands, after it racked up billions of dollars in off-balance sheet trade financing agreements. This sort of debt can be difficult to map and it will take a while for the saga to play out. But on the flipside, the big US banks remain well capitalised and appear to be in rude health after Goldman Sachs, JPMorgan, Citi and Wells Fargo all beat Q3 estimates earlier in the week.
Updated
Asia-Pacific markets slide
Asia-Pacific markets have fallen today, led by a sharp selloff in China.
China’s CSI300 index has dropped by 2.3%, while Japan’s Nikkei is down 1%.
Stock seem to be under pressure after losses on Wall Street yesterday, due to worries about the US regional banking sector.
Reuters also attributes the selloff to “investor caution over trade uncertainties and profit-taking in artificial intelligence shares”.
Jitters are rising about US regional banks, after two lenders disclosed issues with bad and fraudulent loans.
Regional banking stocks fell sharply yesterday, as Wall Street fretted about the state of credit markets.
Zions Bancorp announced it had a $50m charge-off over two bad loans from its subsidiary, California Bank & Trust in San Diego. Western Alliance also said it was dealing with a fraudulent borrower.
More here:
Kyle Rodda, senior financial market analyst at capital.com, says:
Financial stability risks reared their head [yesterday], with two separate regional banks announcing a significant write down due to exposure to one major borrower. Such events raised fears about systemic risks.
While meaty, the size of the bad loans in and of itself is unlikely to pose risks to the overall system. However, the underlying cause of the write-down is lax lending standards and fraud, stoking fears that such behaviour is endemic and liable to see similar defaults occur.
The pound has climbed to its highest level against the dollar in over a week this morning.
Sterling is up a quarter of a cent today at $1.3455, the strongest level since 7 October.
Dollar on track for worst week since August
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
It’s been a rough week for the US dollar, which is set for its biggest weekly drop in two and a half months.
Rising trade tensions between the US and China, and worries that America’s economy may be weakening, have pulled down the greenback against other currencies this week.
The dollar index, which tracks its performance against a basket of currencies, has lost 0.95% so far this week – the biggest five-day drop since early August.
The dollar weakened after Donald Trump threatened new 100% tariffs on China in a row over its rare earth exports last Friday.
Earlier this week, US trade representative Jamieson Greer claimed those export restrictions were a “global supply-chain power grab”, denting hopes of détente between Washington and Beijing.
Concerns about the US economy – which is currently in an economic data blackout due to the government shutdown – is encouraging some investors to diversify away from assets such as the dollar, and Treasury bills, into harder assets such as gold.
Suspicions that US interest rates could be cut steadily in the months ahead are also weighing on the dollar.
Raffi Boyadjian, lead market analyst at Trading Point, explains:
The US dollar…has been sliding since trade relations started to worsen again. Against a basket of currencies, the dollar tumbled to a more than one-week low today before recovering slightly.
Fed Chair Powell’s remarks this week have also been weighing on the greenback. An October rate cut is almost certain after Powell once again emphasized the growing downside risks to the labour market, even in the absence of official payrolls data.
The ongoing government shutdown is another risk that could upend the dollar’s mini rebound since mid-September.
The agenda
10.35am BST: Bank of England chief economist Huw Pill speaking at ICAEW annual conference
3pm BST: IMF press briefing: Regional Economic Outlook for Europe
Updated
