Nikkei and Hang Seng Plunge as US Credit Fears Infect Asia

Asian markets plunged, with Japan’s Nikkei 225 falling 1.6% and Hong Kong’s Hang Seng dropping 2%, as fears over US credit quality infected the region. The sell-off followed heavy losses on Wall Street driven by the banking sector.
The turmoil was ignited by disclosures from two US regional banks, Zions Bancorporation and Western Alliance, which revealed $150 million in combined bad loans. This news raised alarms about the impact of high interest rates on credit quality and lending practices.
European markets followed Asia’s downward trajectory, with the FTSE 100 and Germany’s Dax falling sharply. The banking sector was the epicenter of the losses, with major lenders like Barclays and Deutsche Bank seeing significant share price drops.
The episode sparked comparisons to the 2023 SVB crisis, fueling a massive flight to safety. Jittery investors pushed gold to a new record high, and the VIX “fear index” surged, underscoring the high level of investor anxiety.