Recent rally in FTSE 100 stocks with Chinese exposure, reflects growing investor optimism as US-China trade tensions, at least in rhetoric, may ease. HSBC and Standard Chartered, for instance, gained over 4% after President Trump and Treasury Secretary Bessent signalled a de-escalation in tariffs, lifting sentiment across Asian markets where these lenders generate the bulk of their revenues.
HSBC and Standard Chartered are structurally tied to Asia, with over two-thirds of income linked to the region. That makes them sensitive to trade volatility but it also gives them access to these dynamic growth markets. Crucially, both banks have strong capital positions, rising fee income, and they continue to benefit from higher rates in core markets. Even if rhetoric turns negative again, their diversified footprint and robust balance sheets leave them well placed to absorb trade-war related sentiment shocks.
Broader UK banks have also shown impressive resilience so far in 2025. While UK’s growth is expected to be stagnant this year, we think that lenders are entering this phase with high capital buffers, improved cost control, and conservative lending books. Mortgage stress appears contained, and retail deposit bases remain stable. Domestic-focused banks may see pressure on loan demand, but overall credit quality remains solid.
For retail investors, today’s rally signals more than a temporary relief bounce. It reflects how both globally exposed and domestically focused UK banks are better prepared than in past downturns. With valuations still undemanding and dividend yields attractive, the sector remains worth watching for those seeking long-term income and value as macro risks gradually ease.
This communication is for information and education purposes only and should not be taken as investment advice, a personal recommendation, or an offer of, or solicitation to buy or sell, any financial instruments. This material has been prepared without taking into account any particular recipient’s investment objectives or financial situation and has not been prepared in accordance with the legal and regulatory requirements to promote independent research. Any references to past or future performance of a financial instrument, index or a packaged investment product are not, and should not be taken as, a reliable indicator of future results. eToro makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication.