Market analysis: UK bank numbers and a look ahead at sector stocks in May 2017

With the end of April delivering strong numbers for three of the UK banks, numbers show that banks are returning to "what they should be doing, lending money". Banking numbers having overall surprised to the upside thus far.

RBS and Barclays lagging in comparison to US Investment Banks. Investors are now looking for UK Banks to pay bigger dividends to encourage long term holders to stick with them. A key area of interest will be how much UK banks need to put aside for write downs, with Lloyds still setting aside £350m in the last quarter for ongoing PPI claims.

Banks generally perform better in a higher or rising interest rate environment, therefore any hawkish moves from the Bank of England will benefit the UK's top banks. UK Banks will be looking over their shoulders at the rise of challenger banks, with the likes of Metro Bank performing well. Banks will also need to focus on a recent rise in customer complaints, as reported by the Financial Conduct Authority (FCA).

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That said headwinds may impact the markets in May. The key focus being the French Presidential Election and the increased probability that a shock result could be coming in the shape of the election of Marine Le Pen.

A Le Pen victory would be "bad news for Europe as we know it" and if the results goes against the indications in the polls, then expect to see a drop in the Euro and this will be especially negative for French Banking stocks.

Indications are that Le Pen is gaining ground on her rival but it may not be enough to swing the vote. Markets fully expect a Emmanuel Macron victory. The UK benefits from a strong France, uncertainty in France, resulting from a Le Pen victory, could impact the UK economy.

Investors may however take a risk-off stance heading into the weekend in case we see a surprise result, polls have been seen as misleading indicators, certainly in respect of the Trump Presidential Election victory and Brexit result, both surprising the market and pollsters with the unexpected outcome.

Traders will be glued to their screens on Sunday evening awaiting the result. Any early reaction will be shown in movements in the euro, as currency markets will be open for business when the result is announced. Traders of French Banking Stocks will have an anxious wait until European markets open on Monday morning.


Nick "The Moose" Batsford, the founder of Tip TV, is a well-known and respected former City trader, with more than 25 years' experience in market trading and broking and a specialisation in short-term trading signals. Prior to setting up Tip TV, Batsford worked for various trading and brokerage companies, and eventually managed a hedge fund in London.


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