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FTSE Under Pressure as Carnival and RBS Struggle

Thu, 21st Jun 2018

The FTSE 100 slipped by 0.5 percent, pulling back from a two week high, with RBS and Carnival being two of the weaker performers.

The government has announced plans to sell a 7.7 percent stake in RBS, and this sent the share price of the company downwards. The government is not typically in the business of running banks, and has therefore been looking to sell after having bailed the bank out during the financial crisis.

RBS, today, is rather different to the bank that the government bailed out. Since the financial crisis it has slimmed itself down, and holds fewer assets. It now focuses solely on domestic banking in the UK. The government is selling at 271p, which is significantly lower than the 502p that it bought into the company, but it is highly unlikely that it would recover to that value in a reasonable time.

The political uncertainty in Spain and Italy has started to ease, but the calm could be shortlived as the government is looking for a solution to the Irish border issues in the run up to the EU summit. This presents a window of opportunity for the government to sell before even more uncertainty starts to hamper the company.

Carnvial, meanwhile, is struggling in the face of a strong dollar, a rally in oil prices, and concerns that hurricanes could hamper tourism. The company is also struggling with risks of over capacity, and collectively these issues dragged the share price down by six percent.

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