European banking shares dropped today – with Deutsche Bank's share price falling to its lowest-ever in early trading.
Deutsche shares fell as low as €12.94 , 2.5 per cent lower, while the UK's big four lenders were also hit, with HSBC dipping 1.1 per cent to 420.95p, Barclays falling 2.5 per cent to 157p, Royal Bank of Scotland falling two per cent to 212.6p and Lloyds Banking Group falling 1.8 per cent to 61.9p.
Meanwhile, the Euro Stoxx 600 banks index was down two per cent, hitting its lowest since mid-February.
The news came the day after the FTSE 100 finished higher for the first time in five days, although it failed to rise above 6,000 points. This morning it fell 0.6 per cent to 5,921 points.
What's eating investors? Brexit uncertainty has undoubtedly caused jitters, but rock-bottom bond yields may also be a factor. This week yields on 10-year German bunds turned negative for the first time, meaning there is now $11 trillion of sovereign debt yielding less than nothing.
Last night the US Federal Reserve decided against raising rates again, citing a Leave vote in the UK's EU referendum as a major threat.
That pushed the US dollar below ¥104, its lowest level in two years.
"There’s a growing feeling that central banks are losing credibility," said David Morrison, senior market strategist at Spreadco.
"In the Fed’s case this is due to its lack of coherence. The Fed has emphasised that it is data-dependent, yet has repeatedly ignored data targets when setting rates. It gives the impression of making decisions on the hoof and switching from a dovish to hawkish stance on a whim."