Banks continue to rise in otherwise downbeat U.K. stock market
By Sara Sjolin, MarketWatch
TUI shares slide after trading update
Bank stocks on Thursday stood out in an otherwise listless U.K. stock market, advancing on expectations that interest rates soon will rise in both Britain and the U.S.
Shares of Barclays PLC (BCS) (BCS) posted the biggest gain in London, rising 1.7%. Lloyds Banking Group PLC (LLOY.LN) (LLOY.LN) added 0.7%, HSBC Holdings PLC (HSBA.LN) (HSBA.LN) (HSBA.LN) climbed 0.6% and Standard Chartered PLC (STAN.LN) gained 0.7%.
The positive moves for the sector came after the Bank of England's Chief Economist Andy Haldane late Wednesday in a Sky News interview (http://news.sky.com/story/interest-rate-rise-should-not-be-feared-says-bank-of-england-economist-11056411) said Brits should not fear higher interest rates, sparking speculation that the first rate hike in a decade is imminent.
The economist also reiterated the message from the BOE's September meeting that "we could be nearing the point where a reduction in some degree of monetary stimulus might be warranted in the coming months."
Higher rates tend to boost the banking sector as it means they can charge more for their loans. Across the pond, expectations for a rate hike later this year are also high after Federal Reserve Chairwoman Janet Yellen earlier this week said it would be "imprudent" to leave monetary policy on hold for too long. That helped push U.K. bank stocks higher on Wednesday.
After London trading closed Wednesday, Boston Fed President Eric Rosengren said he backs 'regular and gradual' interest-rate rises (http://www.marketwatch.com/story/feds-rosengren-backs-regular-and-gradual-interest-rate-hikes-2017-09-27). Meanwhile, U.S. President Donald Trump's tax cuts proposal (http://blogs.marketwatch.com/capitolreport/2017/09/27/republicans-roll-out-tax-cut-plans-for-individuals-and-companies-live-blog/) presented on Wednesday was also seen as reinforcing expectations for a rate rise in December.