By Junko Fujita, Ankur Banerjee, Anton Bridge and Nupur Anand
New York/Tokyo/London (Reuters) -Bank Stocks tanks worldwide on Friday as recession fears swept through markets after US President Donald Trump announced the top tariff walls in a century.
The S&P 500 bank index, which tracks US lenders, fell more than 7%, extending decreases after plumbing on Thursday. Citigroup and Bank of America were the largest losers in the index, both dropping more than 7.5%.
JPMorgan Chase, the largest US lender, lost 6.5%, while Goldman Sachs and Morgan Stanley collapsed 7.1%and 6.8%, respectively.
The sale accelerated after the China Ministry of Finance said on Friday that it would impose additional 34% tariffs on all US goods from April 10 while revenge for the movement of Trump.
Banks, which serve as bells for economic activity, saw their shares sink as the US broke with free trade policies accumulated over decades. Investors are speckled for reductions in consumer spending, calling for loans and making deals.
“Bank stock valuations tell us that investors are pressing towards the Bear Case for banks to become a reality,” according to the Raymond James brokerage, which highlighted the expectations of investors for a recession in 2025.
The near -term pain to banks could motivate them to the scale of return returns given that tariffs are more serious than expected, said Mike Mayo, an analyst at Wells Fargo.
“Banks will need to increase backup for future loan loss provisions,” which will weigh profit, he said.
Citigroup was among the largest rejectors, reducing more than 10.5% today before pairing losses to about 8%. On Thursday, he lost 11%.
“Citi has been having a restructuring practice for the past two years, and the profitability was expected to arise,” said Octavio Marenzi, CEO of the Opimas consulting firm.
“That has been disappointing so far, but the stock has got a lot of progress … and now investors see some stress in the market, the swollen stocks are correcting more,” he said.
The tremor was felt across regions. European banking stocks fell by 8% and the financial affairs sector was the largest drag on the Stoxx Europe 600.
In Asia, Japanese Megabanks ended the week with the biggest losses since the 2008 financial crisis, a troubled signal about the results of Trump's trade war that rushed investors.
A general tariff on US imports is expected to take effect on April 5, followed by further levies on dozens of countries.
Increasing revenge fears, which Trump officials have warned whether he could further increase the dispute, have led some to shorten their chances of a recession coming to an end.