FTSE 100 dips as banking shares tumble

Lloyds Banking Group faced a setback in today’s trading as its shares fell by 2%, reaching 41.5p. The decline came after JP Morgan downgraded the stock to an “underweight” rating and slashed its target price from 56p to 42p.

Investor caution extended beyond Lloyds, impacting other major banks as well. Barclays and NatWest both experienced declines, with their shares dropping by 2.7p and 2.8p, respectively. The growing concern revolves around the potential consequences of rising interest rates, which could lead to a demand shock and a surge in bad debt levels.

The banking sell-off also influenced the overall market performance, as the FTSE 100 index shed another 53.89 points, closing at 7407.98. This decline adds to last week’s poor showing, which marked the worst performance since March. As a result of these apprehensions, British Airways owner IAG saw its shares decrease by 2.35p, while Melrose Industries, the owner of GKN, witnessed an 8.4p drop.

Among the other affected companies, BAE Systems experienced selling pressure, with its shares declining by 3%. This decrease follows a partial reversal of the gains seen since the start of the Ukraine war.

Vodafone also faced challenges as its shares fell by 1.6p. Heightened parliamentary scrutiny is being directed towards its deal with Three to create the largest mobile phone company in the UK due to concerns regarding its links with China.

However, not all sectors were affected negatively. Investors sought refuge in the retail sector, resulting in Sainsbury’s shares rising by 2.1p and B&M European Value Retail seeing a 3.8p increase.

Leading the risers board in the FTSE 100 index was Whitbread, the owner of Premier Inn, with a gain of 46p after UBS raised its price target to 4200p after last week’s trading update.

The FTSE 250 index slipped by 0.8% or 137.66 points. The biggest decliner within the index is tech investor Molten Ventures, which saw a decline of 14.8p. However, the FTSE 250 risers board was led by Ferrexpo, a Ukraine-based iron ore pellet firm, which recovered by 6.8p.