
Stock markets around the world plunged on friday as concerns about the creditworthiness of the US banking sector and fraudulent lending practices spread from Wall Street to Asia and Europe, triggering a broad flight to safe havens and erasing weekly gains in major indexes.
The sell-off accelerated after two regional US banks disclosed problems with bad loans potentially linked to fraud, rekindling fears about hidden credit risks more than two years after the collapse of Silicon Valley Bank sparked a banking crisis.

European banks lead declines
European markets opened sharply lower, with the STOXX 600 Banks Index plunging 2.8% in mid-morning London trading. Major lenders bore the brunt of the selling pressure, with Deutsche Bank falling 5.8%, Barclays down 5.4%, and Société Générale declining 4.35%. The pan-European STOXX 600 fell 1.5%, erasing the week’s gains.
“When you see one cockroach, there are probably more”, JPMorgan Chase CEO Jamie Dimon warned this week, highlighting concerns that recent bankruptcies in the auto sector could signal broader credit woes. Dimon’s comments followed JPMorgan’s $170 million write-down over the collapse of subprime auto lender Tricolor Holdings.
The immediate catalyst came on thursday when Zions Bancorporation disclosed a $50 million loss on two commercial loans from its California division, with the bank requesting an independent review amid concerns about borrower fraud. Western Alliance Bancorporation simultaneously revealed it had filed a fraud lawsuit against a borrower who allegedly failed to provide adequate collateral.

Asian markets follow Wall Street lower
Asian financial markets followed Wall Street’s overnight losses, with japanese banks and insurers among the worst performers given their exposure to U.S. markets. The Nikkei 225 fell 1.4% to 47,582, marking its biggest weekly drop since august and snapping a seven-week winning streak. Major japanese financial institutions, including Mizuho Financial Group and Tokio Marine Holdings, fell 3.6% and 4% respectively.
Hong Kong’s Hang Seng Index plunged 1.6%, with technology stocks particularly hard hit as ongoing U.S.-China trade tensions weighed on sentiment. The Shanghai Composite Index declined 2% amid renewed tariff threats from President Donald Trump.
South Korea’s KOSPI initially bucked the regional trend, rising to new all-time highs above 3,794 on optimism about ongoing trade negotiations with the U.S., although the gains later faded.
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