US President Donald Trump announced the highest tariff walls in a century, sparking fears of a recession that has sent bank stocks tumbling globally. The S&P 500 banks index fell over 7% as Citigroup and Bank of America dropped more than 7.5%. JPMorgan Chase lost 6.5%, while Goldman Sachs and Morgan Stanley fell 7.1% and 6.8%, respectively.
The selloff accelerated after China’s finance ministry imposed additional tariffs of 34% on all US goods from April 10 in retaliation for Trump’s move. Investors expect a decline in consumer spending, loan demand, and dealmaking, with some analysts warning of a “bear case” for banks becoming a reality.
Banks are expected to scale back earnings projections due to the severity of tariffs, which will weigh on profits by requiring them to increase reserve for future loan loss provisions. The near-term pain for banks could prompt them to cut their forecasts, with Citigroup seeing its stock decline over 10% before paring losses.
The tremors were felt across regions, with European banking stocks tumbling 8% and Japanese megabanks ending the week with the biggest losses since the 2008 financial crisis. The drop in shares is a sharp reversal for the sector, which was once riding high on post-election optimism.
Source: https://finance.yahoo.com/news/global-rout-bank-shares-intensifies-093258665.html