"S&P 500 futures were down more than a full percentage point this morning, after markets in Asia and Europe sold off heavily in reaction to two small regional U.S. banks that reported exposure to a potentially fraudulent loan worth only $60 million. The "contagion"-as ING called it in a note this morning-spread to Nasdaq 100 futures, which were down 1.4% this morning. The VIX "fear" index (which measures volatility) spiked 32% today."
"What happened next was extraordinary: 74 American bank stocks lost $100 billion in market cap as the S&P 500 declined 0.63%. "The S&P Regional Banks Select Industry Index fell 6.3% on Thursday - the worst fall since Liberation Day," Peter Schaffrik of RBC told clients in a note this morning. Investors are spooked by the First Brands scandal, in which the car parts supplier took more than $10 billion in loans on the private credit market and then went bankrupt."
"Although Goldman Sachs, JPMorgan and Citi all used their earnings calls this week to insist that their due diligence in rating the loans they give out to companies via private credit is both diversified and sound, traders this morning are running for the hills. In Europe, the Stoxx 600 and the FTSE 100 both lost more than a full percentage point immediately after they opened."
Global markets fell sharply after two U.S. regional banks disclosed exposure to potentially fraudulent $50-$60 million loans, sparking fears of broader problems in the private credit market. S&P 500 futures and Nasdaq 100 futures dropped, while bank stocks, Asian and European equities, and the dollar declined. The VIX volatility index surged 32%, its largest jump since April's tariff-driven disruption. Seventy-four American bank stocks lost about $100 billion in market value as the S&P 500 fell 0.63% and the S&P Regional Banks Index plunged 6.3%. Investor concern intensified due to the First Brands private-credit collapse despite major banks' reassurances about due diligence.
Read at Fortune
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