U.K., European bank stocks swoon after Bank of England seeks to calm markets

Sep. 28, 2022 9:16 AM ETBarclays PLC (BCS), HSBC, LYG, KBE, ING, CS, DBBy: Liz Kiesche, SA News Editor22 Comments

The City of London Skyline at Night, United Kingdom


With the market turmoil sparked by the U.K. government proposal to increase spending while cutting taxes, U.K. and European bank stocks are dropping in Wednesday trading.

Earlier Wednesday, the Bank of England said it would temporarily buy long-dated bonds and delay quantitative tightening. The U.K. 10-year gilt (or bond) rose on the news, pushing its yield down almost 5 basis points to 4.04%, but the pound sterling remains under pressure, slipping 0.8% against the U.S. dollar.

In London afternoon trading, Barclays (NYSE:BCS) shares have dropped 4.7% and Lloyds Banking Group (NYSE:LYG) stock has declined 3.7%. HSBC (NYSE:HSBC) U.K. regular shares have dipped 3.0%. In U.S. premarket trading, the dynamics are similar for their ADSs: BCS -4.6%, LYG -3.3%, and HSBC -3.0%.

And since banks don't just operate in their home markets, Deutsche Bank (NYSE:DB) is sliding 4.4% in German trading, Credit Suisse (NYSE:CS) -3.5% in Swiss trading, ING Groep (NYSE:ING) -3.3% in Amsterdam trading.

U.S. bank stocks, however, appear unaffected in premarket trading. The SPDR S&P Bank ETF (NYSEARCA:KBE) is unchanged Wednesday before the bell.

On Monday, Atlanta Fed President Raphael Bostic said the U.K. budget proposal for big tax cuts and increased spending has boosted uncertainty globally, increasing the risk of global recession. In addition, Deutsche Bank sees a "deep and long" recession for the U.K.

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