The FTSE 100 tumbled on Friday as a sell-off spread across worldwide markets over concerns of the stability of banks in America.
On Friday morning shares in global banking giants such as Standard Chartered and Barclays were down by over 5%.
The FTSE 250 was down by 1.6% and the FTSE dropped by 1.5% on Friday morning.
The French Cac was down by 40 falling to 0.8% and the German Dax fell by more than 2%.
Russ Mould, investment director for AJ Bell warned that investors are “spooked” and are “possibly opting to have lower exposure in case a crisis is brewing” within banking.
“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,” he explained.
“In addition to news related to US regional banks, also weighing on sentiment were signs of liquidity pressures in America.
“Banks tapped the Federal Reserve’s short-term lending facility for more than 15 billion US dollars (£11 billion) over the past two days, the largest amount borrowed over a two-day period since the Covid pandemic.”
Richard Hunter, head of markets at Interactive Investor, said: “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.”
