We can clearly see that equities are back under pressure, the Euro Stoxx 600 Banks index fell 5.3% with Germany’s banks leading the decline. Commerzbank was down 10.3%, while French banks Société Générale and BNP Paribas lost 8.3% and 6.5%, respectively.
Today’s decline in Deutsche Bank shares confirms that investors’ worries about the risk of contagion in the banking sector remain high. 

The credit default swap (CDS) is a contract between two parties in which one party purchases protection from another party against losses from the default of a borrower for a defined period. It is important to note that the higher the value of the CDS, the more likely the market sees the issuer defaulting.

Moreover, according to Bloomberg, the U.S. government was investigating banks including Credit Suisse and UBS for allegedly helping Russians evade U.S. sanctions.

On the other side, the ECB raised interest rates by 50bps last week as it continues to monitor inflation levels closely in the eurozone. Overall, the economic conditions remain difficult, with higher rates and rising default risk of contagion in the banking sector, global equities are likely to face more selling pressure in the coming weeks, therefore, we might see the beginning of portfolio rotation toward safe havens like Gold.