Fear index VIX hits 6-month high as US banking shares tumble amid regional bank fraud

By Burhan Sansarlioglu, Mahmut Cil, and Emir Yildirim

ISTANBUL (AA) — The VIX Index, which gauges fluctuations in the S&P 500, hit its six-month high at 28.99 amid concerns in the US banking sector.

The fear index rose on the banking and financial sector stocks’ sell-off, which affected US markets and investor perception.

Recent trade developments between the United States and China have also contributed to rising risks, with US President Donald Trump threatening new tariffs after Beijing imposed restrictions on rare earth exports, while the ongoing federal government shutdown has fueled concerns.

The KBW Regional Banking Index fell 6.3% on Thursday, while JPMorgan Chase and Jefferies Financial Group's shares fell 2.3% and 10.6%, respectively. This came after national banks Zions Bancorp and Western Alliance announced fraud in some loans, raising concerns about their loan portfolios, and their shares fell 13.1% and 10.8%, respectively.

Uraz Cay, a global markets strategist at Türkiye-based AK Investment, told Anadolu that major US banks’ third-quarter earnings showed positive.

“We have yet to receive any negative comments about the outlook for US customers, but on the commercial side, the net debt to EBITDA (earnings before interest, taxes, depreciation, and amortization) ratio of the non-financial sector does not seem to pose a serious threat,” he said.

Cay stated that risks in private loans and vehicle loans rose compared to before.

“The US regional banks’ sensitivity to the housing sector and their operations in the non-transparent market in terms of private loans pose risks to their portfolios,” he said. “In my opinion, these are not systemic risks.”

Cay added that the declining geopolitical risks, the low recession risk that will become clearer as more data is released, rate cut expectations from the Fed, and the ongoing investments into artificial intelligence (AI) will push up global stock indexes.