Global banking shares plunge as recession fears mount

Banking shares worldwide fell on Friday as markets were gripped by recession fears following US President Donald Trump’s announcement of the highest tariffs in a century.

The Standard & Poor’s 500 Bank Index, which measures US banking stocks, fell more than 7%, extending Thursday’s slide. Citigroup and Bank of America were the biggest losers in the index, both falling more than 7.5%, according to Al Arabiya Business.

JP Morgan Chase, the largest US bank, lost 6.5%, while Goldman Sachs fell 7.1% and Morgan Stanley shed 6.8%.

The selloff accelerated after China’s Ministry of Finance said on Friday it would impose additional 34% tariffs on all US goods starting April 10, in retaliation for Trump’s move. Bank stocks, indicators of economic activity, saw their shares decline as the United States departed from decades of free trade policies. Investors braced for a decline in consumer spending, loan demand, and dealmaking.

“Bank stock valuations tell us that investors are pricing in a bear market for banks,” said brokerage Raymond James, which cited investor expectations of a recession in 2025.

Wells Fargo analyst Mike Mayo said the near-term pain banks are experiencing could prompt them to cut earnings forecasts, given that the tariffs were more severe than expected.

“Banks will likely need to build up their loan loss provisions in the future,” he added, which would weigh on earnings.

Citigroup was among the biggest losers, falling more than 10.5% on Friday before paring losses to about 8%. The bank lost 11% on Thursday.

European banking stocks fell 8%, with the financial services sector the biggest drag on the STOXX 600. In Asia, Japan’s major banks ended the week with their biggest losses since the 2008 financial crisis, a worrying sign of the consequences of Trump’s trade war that has rattled investors.

A 10% tariff on US imports is set to take effect on April 5, followed by other tariffs on dozens of countries.

In Europe, shares in Deutsche Bank fell 9%, and Italy’s UniCredit fell 10.1%. France’s Societe Generale lost 10.3%.

Shares in Japan’s largest bank by market capitalization, Mitsubishi UFJ Financial Group, fell 8.5% on Friday, marking a 20% weekly loss, the biggest since 2003.

Shares in Mizuho Financial Group fell more than 22% during the week, the biggest decline since 2008, while Sumitomo Mitsui Financial Group shares fell 20% for the week. Japan’s Topix banking index has fallen 24% from a 19-year high it touched just two weeks ago.