NatWest, rate hike concerns push FTSE 100 down


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The offices of the London Stock Exchange Group can be seen in the City of London, Great Britain on December 29, 2017. REUTERS / Toby Melville / File Photo

  • NatWest drops despite third quarter profit tripling
  • Banks outperform the blue chip index in October
  • FTSE 100 down 0.2%, FTSE 250 down 0.4%

October 29 (Reuters) – UK stocks followed global markets lower on Friday, with anxiety over potential interest rate hikes and a cut by state-owned NatWest bank dragging the index to premier order FTSE 100.

NatWest (NWG.L) fell 4.5% even though its profit tripled in the third quarter as its margin contracted, a sign of how lower central bank rates have squeezed revenue that ‘she can draw loans. Read more

“It was high time for a pullback and today’s numbers gave investors the perfect reason. Profits were still lower than in the second quarter and the net interest margin did not improve,” said Michael Hewson, chief market analyst at CMC Markets.

“Although they had a good run, it was time to take some money off the table.”

However, heightened expectations of an interest rate hike amid a broader economic recovery gave banks a boost, sending the sub-index (.FTNMX301010) 9.2% to its best month. since February 2020.

Investors expect the Bank of England to raise its record interest rates as early as next week for the first time since the start of the pandemic.

The FTSE 100 Index (.FTSE) ended down 0.2%, weighed down by weakness in energy stocks (.FTNMX601010), down 1.2%, although losses were limited by gains in banks (.FTNMX301010).

Oil majors BP (BP.L) and Royal Dutch Shell (RDSa.L) were among the biggest drops due to falling crude prices.

With inflation worries and supply chain constraints weighing on markets, the FTSE 100 only added 2% this month, underperforming a 4% rally among its European peers (.STOXX ).

The Domestically Focused Mid-Cap Index (.FTMC) fell 0.4%, while Games Workshop Group PLC (GAW.L) fell 7.7% after broker Jefferies lowered its target price for the toy maker.

Banks outperformed the FTSE 100 six months out of 10

Reporting by Bansari Mayur Kamdar and Amal S in Bengaluru; Editing by Subhranshu Sahu and Devika Syamnath

Our Standards: The Thomson Reuters Trust Principles.

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