Blockade in the Strait of Hormuz and the banking market shock: US giant bank stocks collapse

The tense geopolitical situation around the Strait of Hormuz, the world's most critical oil artery, and the blockage of shipping routes have dealt a severe blow to the global market. According to the prestigious Bloomberg agency, inflation triggered by a surge in fuel prices has caused a major crisis in the US banking sector.

Major financial institutions have faced unexpected financial losses — Bank of America, State Street, and Citigroup shares of such banking giants plummeted by double digits within a few days.

Energy crisis and the Fed raising rates to 4 percent

Problems in the financial chain have accelerated due to geopolitical confrontation:

• Sharp rise in energy prices: The closure of the Strait of Hormuz caused oil and gas prices to skyrocket in the global market, which directly intensified inflationary pressure on the US economy;

• Federal Reserve decision: In order to curb the accelerating pace of inflation, the US Federal Reserve (Fed) immediately raised the base rate to 4 percent; raised;

• Triple blow: High interest rates slowed economic growth and sharply increased losses for commercial banks regarding loan repayments. Bloomberg Intelligence analysts note that these factors are collectively putting heavy pressure on the banking system.

Losses of US banking giants: Numbers and facts

Following the close of stock trading, America's most prestigious banks lost a significant amount of capitalization:

• Bank of America shares 18 percent collapsed;

• State Street securities value 14 percent fell;

• Citigroup assets 10 percent depreciated.

Longest decline in 18 years

The US banking system is experiencing one of the most serious tests in the last two decades:

• Collapse of the KBW index: The KBW index reflecting the status of the 24 largest US banks, has been falling continuously for six consecutive weeks;

• 18-year anti-record: This has been officially recorded as the longest series of collapses since the 2008 global financial crisis;

• 13 percent below the August peak: Compared to the highs observed last August, this index has fallen by a total of nearly 13 percent. fallen.

If the tension in the Strait of Hormuz is not resolved, oil shortages and high interest rates could maintain long-term instability not only in the US banking system but across all global stock exchanges.