HSBC, Natwest and Barclays shares plunge as FTSE 100 downturn deepens
The FTSE 100’s ‘Big Five’ banks were back in the red on Friday as tariff woes intensified.
Shares in Natwest and Barclays slumped nearly ten per cent after China announced retaliatory tariffs against the US, making them the index’s top fallers.
HSBC lost over eight per cent. Lloyds and Standard Chartered were not far behind with losses of over seven per cent.
The FTSE 350 bank index plunged nearly eight per cent. Over the past five days the index has lost nearly 15 per cent.
The FTSE 100 tumbled as much as 3.6 per cent after China’s announcement.
John Cronin, managing director of SeaPoint Insights, said: “It is not therefore no surprise to see bank stocks sell off particularly aggressively in recent days given their status as levered plays on the economies in which they operate.
He added: “Standard Chartered and HSBC are most exposed in the UK given their dependence on global trade flows and their presence in jurisdictions that will be subject to higher tariffs than the UK.”
Cronin stated investment banks, such as Barclays, were more exposed than their domestic retail and commercial banking-focused peers, were more exposed to the economic turmoil.
Analysts at Barclays said: “These new tariffs will dampen the global economic outlook, both globally and in Europe, which bodes poorly for earnings.
“Our economists believe that recession risks have risen, with policy support from governments and central banks crucial to gauge the extent of downside risks.”
Lenders with Asian-focus to take biggest hits
Vivek Raja, equity analyst at Shore Capital, said: “The shock and awe of Trump’s capricious foreign policy strategy has created acute anxiety, which is typically not conducive to the health of financial markets.
“We expect more turbulence and emotional share price responses over the coming days. The impact of tariff wars on the fundamentals of our UK financials stock coverage will be indirect.”
He added that business models would be stung by changes to economic growth, wealth formation, inflation, interest rates, financial markets, and associated regional differences.
Raja said lenders with an Asian focus, such as HSBC and Standard Chartered, would likely suffer the most significant blows compared to their more UK-domestic counterparts.
Trump placed a 10 per cent tariff on UK imports to the US, which he said was the baseline for all countries.
Meanwhile, Asian economies were handed some of the steepest levies during the President’s ‘Liberation Day’ speech.
China was dealt a 34 per cent tariff taking its total import tax to 54 per cent, while Vietnam and Taiwan were slapped with 46 per cent and 32 per cent rates respectively.