On October 17, 2025, due to renewed credit pressure in the American banking industry, investors have expressed concerns about financial stability. Global stock markets saw a widespread decline on Friday, October 17, with a simultaneous increase in risk aversion. Driven by safe-haven buying, the price of gold surged past the $4,300 per ounce mark, reaching a historic high and poised to achieve the strongest weekly performance in 17 years.
On Friday, the spot gold price briefly hit a new record of $4,378.69 per ounce, with a potential weekly increase of about 8.5%. This would be the largest weekly gain since the financial crisis ignited by Lehman Brothers’ bankruptcy announcement in September 2008. Silver prices also followed the upward trend of gold, reaching a new high of $54.35 per ounce.
The trigger for market selling was several American regional banks disclosing their individual credit issues. Zion Bancorporation announced that due to two commercial loans in its California branch, it would incur a $50 million loss in the third quarter. Following this news, Zion Bancorporation’s stock price plummeted by 13%.
Western Alliance also filed a lawsuit against Cantor Group V LLC, accusing the borrower of fraud, leading to an 11% decline in Western Alliance’s stock price.
Jefferies also revealed exposure to the bankrupt car parts manufacturer First Brands, causing its stock price to drop by 9%.
Analysts point out that while the scale of individual events may not constitute systemic risk, the loose lending standards and fraud issues exposed raise concerns about the widespread existence of such practices in the market.
In light of the decline in regional bank stocks, the S&P 500 index reversed its early gains on Thursday, falling by 0.6%. The Dow Jones Industrial Average dropped by 0.7%, and the Nasdaq index declined by 0.5%.
The downward trend in the U.S. stock market on Thursday quickly transmitted credit concerns to international markets, with bank stocks bearing the brunt of the impact.
Asian financial stocks also faced pressure, with Japanese bank and insurance sector stocks falling by nearly 3%, the Nikkei index in Japan dropping by 1.5%, the Hang Seng index in Hong Kong plunging by 1.8%, and the China SSE 300 blue-chip stocks dropping by 1.5%.
The Taiwanese stock market also weakened, despite semiconductor manufacturer TSMC announcing record profits for the third quarter and expressing optimistic prospects for artificial intelligence (AI) capital expenditures, the Taiwan Weighted Index still fell by 1.1%.
The Stoxx Europe 600 Banks Index also saw a decline of about 2.8% after opening in Europe. Deutsche Bank plummeted by 5.8%, Barclays fell by 5%, and the pan-European Stoxx 600 index dropped by 1.5%.
Affected by bank risks and weak macroeconomic data, investors firmly believe that the Federal Reserve (Fed) will shift towards more accommodative monetary policies.
Safe-haven funds flowed into U.S. bonds, driving the yield on 2-year Treasury bonds to a three-year low of 3.3890%. The market anticipates that the Fed will cut interest rates at least twice more this year.
Federal Reserve Governor Christopher Waller also expressed support for rate cuts, further strengthening market expectations.
In the currency market, the U.S. dollar weakened, while traditional safe-haven currencies such as the Japanese yen, Swiss franc, and others saw significant gains.
In terms of geopolitical developments, U.S. President Trump and Russian President Putin agreed to hold a summit in Hungary to discuss the conflict in Ukraine. This news was interpreted by the market as a possible easing of geopolitical tensions.
As a result, the European defense stock index dropped by more than 3%, and oil prices extended their decline to a five-month low. U.S. crude oil prices fell by 0.4% to $57.25 per barrel.