Trump's Interest Rate Proposal Creates Waves in Financial Sector

U.S. and UK financial stocks fell as President Trump's proposal for a 10% credit card interest rate cap impacts industry revenue. Analysts express doubts about the feasibility of implementing such a cap, suggesting potential risks to credit access and a shift towards alternative lenders.

U.S. financial stocks, along with UK-listed lenders, took a hit on Monday as President Donald Trump's proposal for a one-year cap on credit card interest rates rattled the financial industry. This unexpected move sent ripples through global markets, exacerbating existing concerns about uncertainty in interest rates.

In premarket trading, JPMorgan Chase and Bank of America, two of the largest U.S. banks, saw their shares drop 2.8% and 2.6% respectively. Citigroup experienced a 4.1% fall, and Wells Fargo declined by 2.4%. Trump's announcement came without a clear plan for implementation, leading to widespread skepticism from analysts and investors.

Analysts warn that the proposed cap might drive consumers towards more costly debt options, with borrowing potentially shifting from traditional banks to non-bank lenders like pawn shops. With legislative hurdles ahead and questions about presidential authority, the plan faces potential resistance in Congress.

(With inputs from agencies.)