London’s FTSE 100 suffered its biggest one-day decline in around a month on Tuesday, falling 0.8% as heavy losses for HSBC, Reckitt Benckiser and oil majors outweighed gains in mining shares, while investors awaited Wednesday’s UK Autumn Budget and US Federal Reserve interest rate decision.
The FTSE 100 closed down 80.79 points at 10,686.54, reversing Monday’s gains and underperforming major European and US stock markets.
However, the broader UK market proved more resilient, with the FTSE 250 climbing 215.12 points, or 0.9%, to 24,716.37, while the AIM All-Share advanced 0.7% to 758.49.
HSBC was among the biggest blue-chip fallers, declining 5.4% to 1,291.40p, after its third-quarter earnings disappointed investors despite a substantial increase in reported profits.
The banking giant reported revenue of $18.62 billion, up 4.8% on a constant-currency basis, but below analyst expectations of $18.93 billion.
Banking net interest income increased to $11.66 billion from $11.05 billion, also missing the $11.90 billion market consensus.
Although HSBC reported a 32% increase in pre-tax profit and announced a further $1 billion share buyback, analysts highlighted weaker-than-expected income and growing competition for deposits.
Bank of America described the results as soft, while Citigroup considered the performance mixed. Jefferies also highlighted management’s cautious commentary regarding competitive pressures on deposits in Hong Kong and the UK.
Reckitt Benckiser dropped 4.9% to 5,218p after lowering its full-year sales growth forecast following weaker-than-expected third-quarter trading.
The consumer goods group now expects 2026 like-for-like revenue growth of between 3.5% and 4.5%, down from its previous guidance of 4% to 5%.
The downgrade reflects manufacturing constraints affecting Lysol cleaning products in North America and slower demand growth in China’s vitamins, minerals and supplements market.
Energy companies also weighed heavily on the index as Brent crude retreated to $114.13 a barrel, compared with $117.02 on Monday.
BP fell 2.9% to 612.70p, while Shell declined 1.8%, reflecting the impact of weaker oil prices on investor sentiment towards major producers.
The decline followed diplomatic discussions in Tehran involving representatives from Saudi Arabia, Turkey, Pakistan and Iran, aimed at reducing tensions and preventing renewed military escalation in the Middle East.
Mining shares provided some support, with Antofagasta leading the FTSE 100 gainers, rising 137p to 3,311p.
Barratt Redrow advanced to 337.90p, Endeavour Mining gained to 3,983p, Rio Tinto climbed to 6,400p and Anglo American rose to 3,838p.
The gains came as gold strengthened to $4,057.67 an ounce, compared with $4,017.92 on Monday.
Among mid-cap companies, Vistry Group surged 8.2% after announcing that Severn Trent Chief Financial Officer Helen Miles would join the housebuilder as its new finance chief during 2027.
Miles joined Severn Trent in 2014 and became its CFO in 2023, bringing financial and operational experience to Vistry’s leadership team.
Elsewhere, Shoe Zone fell 8.8% after forecasting an adjusted pre-tax loss of approximately £1 million for the financial year ended 3 October, compared with a £2.4 million profit a year earlier.
The discount footwear retailer reported a 4.5% decline in revenue to £142.4 million, reflecting weaker consumer confidence and a reduction in its store estate from 269 to 251 shops.
European and US markets performed more strongly than London, with France’s CAC 40 closing 0.6% higher and Germany’s DAX gaining 0.8%.
On Wall Street, the Dow Jones Industrial Average was up 0.1% around London’s close, while the S&P 500 advanced 0.7% and the technology-heavy Nasdaq Composite climbed 1.3%.
US investor sentiment received some support from stronger consumer confidence figures, with the Conference Board’s index rising 7.5 points to 91.7 in October, exceeding expectations for a decline.
However, markets remain focused on Wednesday’s Federal Reserve interest rate announcement, with most economists expecting policymakers to leave borrowing costs unchanged.
Bank of America remains an exception, forecasting a quarter-point increase amid concerns that US inflation remains persistently above the Federal Reserve’s 2% target.
Investors will also scrutinise comments from Fed Chair Kevin Warsh for signals about future monetary policy, particularly whether further tightening may be required before the end of 2026.
In currency markets, sterling weakened to $1.3307 against the dollar, compared with $1.3353 on Monday, while the euro slipped to $1.1142.
US Treasury yields edged higher, with the 10-year yield reaching 5.00% and the 30-year yield rising to 5.31%.
In London, attention is firmly focused on Chancellor John Healey’s first Autumn Budget on Wednesday, with investors assessing the potential impact of tax changes, government borrowing and plans to stimulate economic growth.
The Government is expected to outline additional investment through public financial institutions, potentially benefiting sectors including infrastructure, defence, artificial intelligence and energy.
Sue Noffke, manager of the Schroder Income Growth Fund, warned that further increases in corporate costs could undermine business investment and economic growth.
She suggested that policy stability and measures encouraging private-sector investment would be particularly important for UK-listed companies.
The FTSE 100’s decline contrasted with gains across the FTSE 250, AIM and major international markets, suggesting that weakness was concentrated among selected heavyweight companies rather than reflecting a general retreat from equities.
Wednesday promises another significant session for investors, with third-quarter results expected from GSK and Standard Chartered, a trading update from Unilever, the UK Autumn Budget and interest rate announcements from the Federal Reserve and Bank of Canada.
The combination of corporate earnings, fiscal policy and monetary decisions could shape the direction of UK and global equity markets for the remainder of the week.
