HSBC and Barclays shares sink as trouble looms for FTSE 100 banks
The FTSE 100’s ‘Big Five’ banks were swallowed up by the red on Wednesday as the global trade war ramped up.
China increased its tariff on US goods to 84 per cent – a move which followed President Donald Trump’s 50 per cent levy coming into effect today, which took China’s total import tax to 104 per cent.
Shares in HSBC dropped over four per cent on the back of Beijing’s retaliation.
Meanwhile, Barclays and Standard Chartered were down nearly five per cent.
Stocks had already taken a beating in early trading, as Trump showed no signs of backing down from his tariff agenda.
Domestic-leaning lenders Lloyds and Natwest were down nearly three and four per cent.
Russ Mould, investment director at AJ Bell, said: “Yesterday’s fragile recovery in stocks has been shattered by renewed selling as reciprocal tariffs on what the Trump administration regards as the ‘worst offenders’ comes into effect.
“Investors had initially taken some positives from a willingness in the White House to negotiate with Japan and Israel but an escalation with China triggered another sell-off on financial markets.”
Lenders risk appetite could change
According to Bloomberg calculations on Tuesday, over $700bn (£546bn) of global bank stocks’ market value has been wiped out since Trump’s ‘Liberation Day. ‘
With its Asia-focused operations driving losses, HSBC alone has dropped almost $30bn (£23bn).
The UK’s top lenders will post half-year results in late July, where shareholders could be dealt a blow as the fallout sinks in.
Gary Greenwood, equity analyst at Shore Capital, said reports would likely reflect “volatility in capital markets”.
He said: “IPO’s that were going to happen, impact in market related activity, impact in wealth management areas – that’s where you’ll feel it first.”
Lender’s forward-looking guidance was likely to be hit by tariffs, Greenwood added.
“On an accounting basis, banks might start to add a bit to their provisions.
“More uncertainty could make them more cautious about lending and risk appetite could change to not push as hard in terms of growth.”
This would create a fresh headache for Chancellor Rachel Reeves, who has been pushing banking giants to boost growth across the UK.
The Chancellor has held summits with banking chiefs in recent months as she seeks to boost growth across the City.