Is the FTSE 100 Poised for a 2026 Bull Run? A Deep Dive into HSBC, NatWest, and Index Forecasts

The FTSE 100 has surged to record highs, breaching the 9,900 mark in early November 2025, defying initial market skepticism, according to Investing.com. This momentum is fueled by strategic pivots from key constituents like SSE PLC and BAE Systems, while macroeconomic tailwinds-such as potential Bank of England rate cuts-add layers of complexity to the index's 2026 outlook. For investors, the UK banking sector, particularly HSBC and NatWest, offers a compelling lens to assess the FTSE 100's trajectory.

Strategic Equity Selection: HSBC and NatWest in the Spotlight

HSBC's recent performance underscores its resilience. The bank reported a quarterly EPS of $1.80, surpassing estimates by $0.15, and raised its 2025 net interest income (NII) guidance to $43 billion or more, according to MarketBeat. Its cost-cutting initiatives, targeting $1.5 billion in savings by 2026, are highlighted in Goldman Sachs analysis, which notes the bank's strong revenue performance. Meanwhile, NatWest's Q3 2025 results revealed a 32.4% year-on-year EPS increase and a £750 million share buyback, reflecting disciplined growth and climate finance progress, as detailed in Investing.com's earnings call transcript. Both banks are recalibrating strategies to align with macroeconomic shifts, but their divergent approaches highlight the sector's fragmentation.

Macroeconomic Tailwinds: Interest Rates and Inflation

The UK's inflation and interest rate landscape is pivotal. Recent jobs data has intensified expectations of a Bank of England rate cut as early as December 2025, as reported by Yahoo Finance, a move that could alleviate pressure on borrowers but compress banks' net interest margins. HSBC, for instance, has raised its 2025–2027 return on tangible equity (ROTE) guidance to a "mid-teens" range (14–16%), as noted in Goldman Sachs analysis, signaling confidence in adapting to rate volatility. NatWest, however, faces a steeper challenge: while its 2030 climate finance target of £200 billion is ambitious, as detailed in Investing.com's earnings call transcript, its recent share price dip suggests market skepticism about its ability to balance growth with macroeconomic headwinds, as reported by Nasdaq.

The 2026 Bull Run: A Calculated Bet

The FTSE 100's 2026 prospects hinge on two factors: the pace of rate cuts and the resilience of its energy and defense sectors. SSE's £33 billion infrastructure investment, as reported by Proactive Investors, and BAE's £4 billion Türkiye contract, as reported by Proactive Investors, are tailwinds, but housing market slowdowns and NatWest's uncertain 2026 outlook introduce risks. For HSBC, its mid-teens ROTE guidance and cost discipline, as noted in Goldman Sachs analysis, make it a relative safe haven, while NatWest's strategic clarity on climate finance, as detailed in Investing.com's earnings call transcript, could unlock long-term value.

Investors should monitor the Bank of England's December 2025 policy decision, as reported by Yahoo Finance, and NatWest's fiscal 2026 guidance (currently absent in public filings). A balanced portfolio-leveraging HSBC's stability and SSE's growth-may outperform in a 2026 bull run, provided inflationary pressures abate.