The UK’s biggest banks were among FTSE 100 stocks hit by a global sell-off on Monday as investors were spooked by the prospect of a US recession.
Major domestic lenders Barclays and Natwest dropped as much as 5.8 per cent and 4.9 per cent. Lloyds Banking Group, which is Britain’s largest mortgage lender and often considered a bellwether for the UK economy, sank as much as 4.5 per cent.
The moves come as part of a wider rout in global markets triggered by fears that the world’s largest economy may be headed for a recession, with just three FTSE 100 stocks currently in the green and the index trading at its lowest level since April.
The tech-heavy Nasdaq 100 was at one point this morning projected to plunge 1,000 points at the open.
Elsewhere, Japan’s Nikkei 225 dropped 12.5 per cent in its biggest intraday fall since 1987, while South Korea saw trading curbs for the first time since 2020.
Asia-focused HSBC, Europe’s biggest bank with a market capitalisation of £119.73bn, dropped as much as 3.3 per cent in London.
The bank’s shares are falling for their third session in a row, with a 12.2 per cent drop over the period erasing all of HSBC’s gains so far this year. Barclays and Natwest remain up 30 per cent and 44 per cent respectively in the year to date.
“A market storm is emerging from a seemingly cloudless summer sky,” said Russ Mould, investment director at AJ Bell.
“The question now is whether this is just a tempest in a teapot, and the result of thin trading volumes as the big hitters head to the beach and leave deputies and juniors in charge, or whether it is the harbinger of a more serious – and bearish – shift in market sentiment.”
Shares in the UK’s Big Four banks pared some of their losses later in the morning after a closely-watched survey suggested the economy will continue to grow in the months ahead.
S&P’s purchasing managers’ index (PMI) for the services sector picked up to 52.5 last month, rising from 52.1 in June and marginally ahead of the 52.4 recorded in the ‘flash’ estimate.