Stock markets fall as bank fears go global

Stock markets fell on Wednesday as investor fears over the health of the banking sector resurfaced and spread around the world, reversing a rally on Tuesday when the panic seemed to end.

European markets were hit hard, with shares of many of the region’s largest banks falling sharply. Premarket trading in the U.S. also suggested that much of Tuesday’s gain could be quickly wiped out, as concern persists over the fallout from the collapse of Silicon Valley Bank and Signature Bank, which were seized by regulators after suffering devastating runs on deposits.

The catalyst in Europe appears to be Credit Suisse, the error-prone Swiss bank that has struggled for years to turn things around, with customers routinely shifting assets to rival banks. It recorded the most striking drop, with its shares losing more than 20%, setting a new record. On Wednesday, the bank’s largest shareholder, Saudi National Bank, ruled out providing more money to Credit Suisse as it grapples with its latest turnaround plan.

The fall in Credit Suisse shares caused temporary halts in its trading. Shares of Societe Generale and BNP Paribas in France fell around 10%. The broad Stoxx 600 index fell more than 2%, dragged down by banks.

S&P 500 futures were 1.8% lower, implying that when markets open, all of the previous day’s gains would be reversed. US bank stocks were mixed in premarket trading.