The downward trend follows a sharp selloff in US financial stocks

European and Asian stock markets plummeted on Friday, following a rout in US equities amid liquidity concerns in the banking sector. The meltdown was triggered by US bank SVB Financial, known as Silicon Valley Bank (SVB), which plunged 60% on Thursday after revealing that it needed to raise more than $2 billion in capital to offset losses from bond sales. 

The announcement rocked financial stocks, with Euro Stoxx Banks index on Friday on pace for its worst day since June, led by a decline of more than 8% for Deutsche Bank. Societe Generale, HSBC, ING Group and Commerzbank all tumbled more than 5%.

Asian stocks suffered their worst day in five months, with Hong Kong's Hang Seng index plummeting 3% on losses in heavyweight technology stocks. The Shanghai Composite dropped 1.4%, while Japan's Nikkei 225 index fell 1.67%.

Investors started offloading US bank stocks on Thursday after SVB, a major lender to the tech industry, announced aggressive measures to support its balance sheet. The bank had reportedly been forced to sell all of its available-for-sale bonds at a $1.8 billion loss as its startup clients withdrew deposits.

The news, which follows the collapse of the crypto-focused bank Silvergate, led to another wave of deposit withdrawals, people familiar with the matter told CNBC.

All of this led to the four largest US banks - JPMorgan Chase, Bank of America, Wells Fargo, and Citigroup - seeing their stock prices lose a cumulative $52 billion in a single day.

SVB, which had a market value of $16.8 billion to end last week, was worth $6.3 billion as of Thursday.

"The issues at SVB have been like a cold shower and with the Fed having just countenanced the idea of faster hikes once again, the potential for a very unhappy equity market should the jobs data surprise on the upside is very real indeed," James Athey, investment director at global investment company Abrdn, told Bloomberg. "It has always been the case that the sort of hikes we have seen from the Fed were going to cause problems somewhere," he added.

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