British equities kicked off the trading week on a positive note, with the FTSE 100 index rising by 0.16% on Monday. However, not all stocks performed well in this environment.
Barclays Shares Experience Decline
Barclays (BARC.L) was one of the underperformers, falling by 2.44%. This drop followed a statement from US President Donald Trump, who proposed capping credit card interest rates at 10%. Analysts from AlphaValue/Baader Europe warned that such a cap would significantly hurt Barclays’ U.S. Consumer Bank.
According to their analysis, the reduction in net interest income could force Barclays to reconsider its riskier “Partner Card” portfolios. This situation may lead to credit limit reductions and fewer reward perks, directly impacting the bank’s profitability.
Impact on Barclays’ Financial Goals
This potential shift poses a risk to Barclays’ target of a 2026 return on tangible equity. Nonetheless, the firm’s U.S. card sector is relatively small, representing less than 4% of its total market capitalization, mitigating the overall effect on the bank.
Market Overview and Economic Indicators
The trading week ahead includes key economic indicators that could influence market sentiment. The British Retail Consortium will release its retail sales monitor for December on Tuesday. On Thursday, important reports will be published on the RICS house price balance, along with updates regarding the gross domestic product (GDP), production, and trade balance for November.
Deutsche Bank Research anticipates that traders will pay close attention to the UK GDP data. The aim is to identify signs of stabilization amid recent slower growth narratives. Furthermore, BofA Global Research is projecting zero growth in monthly GDP for November 2025, indicating potential interest rate cuts in 2026.
