The country's financial sector is not in serious waters, with the iShares STOXX Europe 600 Banks down 12.09%, compared with a drop of just 3.15% in the broader index, the FTSE 100. Barclays (LON: BARC), one of the UK’s top banks, was one of the hardest hit, with its shares down nearly 30% in early trading, before losing 17.68% when the exchange closed for the day. The Royal Bank of Scotland (LON: RBS), Lloyds Banking Group (LON: LLOY) and HSBC (LON: HSBA) all took a beating too, as soon as trading sessions started.
Shock and uncertainty were a drag with banking equities suffering especially deep losses. The Dow sank 610.32 points on June 24, and the Dow Jones US Banks Index, were down from 302.84 to 282.25 points. The broad-based S&P 500 slumped 3.59% to 2,037.41, while the S&P Banks Select Industry Index declined 4.67% to 656.54 points. The tech-rich Nasdaq Composite Index was down 4.12% to 4,707.98, while the KBW Nasdaq Bank Index was down 5.45%.
Large US banks, which have mostly made London their European headquarters, were knocked down on expectations that the Brexit would mean high costs to restructure their businesses against a backdrop of growing political uncertainty in Europe. JPMorgan Chase & Co (NYSE: JPM), Bank of America (NYSE: BAC), Citigroup (NYSE: C), Wells Fargo & Co (NYSE: WFC), Goldman Sachs Group (NYSE: GS) and Morgan Stanley (NYSE: MS) all posted huge trading losses — at an average of 7.25% — upon the announcement. Brexit may also cause the US Federal Reserve to again postpone raising interest rates — or even cut rates — which could ruin banks' likelihood of sustaining profitability without considerable staff cuts. #MergentInc #industryreports #banking
(Currency exchange rates as of July 17, 2016)