BoE hints at bigger rate hikes: Which stocks should you look at now?

July 07, 2022 04:12 PM AEST | By Abhishek Sharma

BoE hints at bigger rate hikes: Which stocks should you look at now? — Image source: © Fazon1 | Megapixl.com

Highlights:

The Bank of England may announce bigger interest rate hikes if required to control high prices.

Inflation may exceed 11% in the autumn this year, the central bank had earlier warned.

Announcing a rise in interest rates last month, the Bank of England (BoE) indicated that inflation might exceed 11% in the autumn when the next energy price cap comes into effect. It also made it clear that it would act 'forcefully' to control inflation if needed. So far, the bank has been taking a gradual approach in raising the interest rates. In the last five meetings, the bank has increased the rates by a quarter percentage point to avoid the risk of clogging the economic growth. However, this may change soon.

According to reports, policymakers at the bank have signalled that they will not shy away from bigger hikes if required to stop the high inflation from becoming persistent.

Sir Jon Cunliffe, deputy governor of the Bank of England, told BBC Radio 4's Today program that the bank would do "whatever is necessary" to curb the inflation problem and ensure it isn't embedded in the UK economy. He added that the bank expects the cost-of-living crisis to actually hit people's spending, which will, in turn, start to cool the economy.

Bank of England raised interest rates last month

Separately, the central bank's chief economist Huw Pill has said that interest rates may need to rise quickly, if required, to control inflation. He added that the bank's sole purpose is to bring the price growth down. The economist also pledged that BoE would bring inflation back to its 2% target.

Here are some FTSE-listed stocks that are likely to be affected if the Bank of England announces a bigger rise in interest rate.

HSBC Holdings Plc (LON: HSBA)

Europe's largest bank HSBC offers a plethora of banking and financial services. With a market cap of £103,976.42 million, the lender is listed on the blue-chip FTSE 100 index. Its one-year return currently stands at 26.65%, and the year-to-date (YTD) return is 17.57%. The earnings per share (EPS) is 0.62. Shares of HSBC were trading at GBX 527.70, up by 1.74%, as of 8:03 am GMT+1 on Thursday.

Barclays Plc (LON: BARC)

Barclays is another major lender in the UK and offers multiple banking and financial services to retail and corporate customers. The stock has provided negative returns of -12.63% to investors over the past one year, and its EPS stands at 0.38. It is also listed on the FTSE 100 index. Shares of Barclays traded 1.93% higher at GBX 149.58 at 8:04 am GMT+1 on 7 July 2022, with a market cap of £24,212.82 million.

Lloyds Banking Group Plc (LON: LLOY)

The multinational banking group is the UK's largest domestic lender. As of 7 July 2022, its stock has provided a negative return of -9.15% to investors in the past 12 months. The YTD return also stands in the negative zone at -11.79%. Lloyds holds a market cap of £28,504.00 million, and its shares were trading higher by 2.10% at GBX 42.16 at 8:06 am GMT+1 on 7 July 2022.

Standard Chartered Plc (LON: STAN)

Standard Chartered is another multinational lender listed on the FTSE 100 index. It has a market cap of £17,159.96 million, and its stock price has risen by 31.91% in the past 12 months. The EPS stands at 0.10. The lender's shares surged by 3.08% and traded at GBX 596.20 as of 8:07 am GMT+1 on 7 July 2022.

Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.

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