FTSE 100 Slips As Oil Prices Fall

The FTSE 100 ended lower on Monday, as Lloyds Banking Group became one of the biggest casualties in the index. The bank was downgraded by JPMorgan CAzenove, from 98p to 90p, in part because of the delay in interest rate increases, and the impact that floods had on the bank’s insurance business.

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shareprices.com - Tuesday, January 26, 2016

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Lloyds Banking Group

While revenue pressure hit the bank hard, JPMorgan believes that Lloyds is in a good position within the sector, and that it will be able to complete its balance sheet transformation soon, and come out with growing dividends.

However, while Lloyds is still JPMorgan’s top pick when it comes to UK banks, the lower price target worried investors, and caused shares to fall by 3.7p, a decrease of 5.6 percent.

There was a separate note issued by Berenberg relating to European banks. This note, which carried the title “Fee Falling” described how European banks were at all-time lows, underperforming by about 11 percent over the last three months. This note did little to help the banking sector, and contributed to the fall of the FTSE 100. Meanwhile, miners and the supermarket sector both struggled. Tesco lost ground in anticipation of a report by the Serious Fraud Office.

Crude oil prices are falling, and the correlation between the stock market and crude oil is at a high point right now. Given that the FTSE 100 has just clawed itself out of a bear market, these struggles will weigh heavily on the minds of even the most bullish investors.

 

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