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The Barclays (LSE: BARC) share price has slumped 13% since President Trump imposed his punitive import tariffs on the world.
It comes after the FTSE 100 fell more than 3% over the same period. It’s back down to where it was as long ago as… oh, only January. Maybe not such a big deal. It’s a smaller fall than the S&P 500, which lost 4.8% on the day after the announcement. And the Nasdaq fell 6%.
The price movements I talk about here are as I write on 4 April, and are likely to change even as the minutes go by.
Panic, or what?
What would billionaire investor Warren Buffett do? He’d at least be able to provide a quote to make us think:
Every decade or so, dark clouds will fill the economic skies, and they will briefly rain gold. When downpours of that sort occur, it’s imperative that we rush outdoors carrying washtubs, not teaspoons.
Letter to Berkshire Hathaway shareholders, 2016
The question is, do Barclays shares look like the shower of gold he’s talking about? Well, the dramatic fallout from Trump tariffs looks pretty torrential to me.
Why Barclays?
Barclays isn’t the only FTSE 100 bank to fall in the past couple of days.
With these increased import levies being imposed on goods, it’s not immediately obvious why banks should suffer. At least not directly. But when other businesses hit a downturn, the banks behind their financing really can’t escape some of the pain.
NatWest Group is down 8.9%. And the Lloyds Banking Group share price has dropped 8.8%, despite a focus on UK business.
Barclays was the one notable exception after the 2008 banking crisis to maintain its international banking business. Close to a third of its revenues come from the US. So it’s hardly surprising that sentiment has shifted against it more than the other UK high street banks.
In perspective
Before we get too shaken by this sudden share price slump, we really should look at the bigger picture. Barclays shares have still climbed 33% in the past 12 months. And they’ve more than trebled over five years.
Even after that, were looking at a trailing price-to-earnings (P/E) ratio of about 7.4, only around half the FTSE 100 average. It means earnings in 2025 could take a significant knock and still leave the shares in what I see as good-value territory.
Forecasts see rising earnings pushing the Barclays P/E down to 6.7 in 2025, and as low as 5.3 by 2026. They’ll no doubt be updated soon. But I still see a fair bit of safety margin in such meagre valuations.
Snap it up?
Barclays has to be worth considering for any investor who thinks that Donald Trump, like countless others who’ve tried before him, will not be able to buck the market over the long term.
In fact, I think the same about a large number of fallen UK shares right now. And some US ones. Where’s my washtub?
