FTSE 100 Banks Face Test as Interest Rates and M&A Trends Weigh

The FTSE 100 Index remained relatively stable this week as investors weighed the escalating UK-Iran crisis, ongoing US earnings season, and key UK economic releases.

The market digested the latest jobs, inflation, and retail sales data for July, which could influence the Bank of England's next policy decision. Top UK banks have done well this year, with emerging-markets-focused ones like Standard Chartered and HSBC being the best gainers after rising by 15% and 28%, respectively.

Lloyds, Barclays, and NatWest have jumped by 13%, 8.3%, and 2%, respectively. These banks will release their financial results next week, with Barclays going first on Tuesday, followed by Standard Chartered on Wednesday. Lloyds and NatWest will release the numbers on Thursday and Friday, respectively.

The upcoming numbers are expected to show that these banks did well in the last quarter, helped by elevated interest rates and muted delinquencies. Barclays' numbers will be closely watched due to its business model, which includes operating a retail bank and being one of the top players in trading and investment banking. As a result, it is benefiting from trends in M&A, IPOs, and debt.