Early market roundup: Stocks cautious ahead of UK budget, US rate call

The FTSE 100 opened lower on Wednesday, in a mixed open for UK stocks, as investors took a watchful stance ahead of the UK budget and US interest rate decision.

The FTSE 100 index opened down 22.99 points, 0.2%, at 10,663.55. The FTSE 250 was down 15.15 points, 0.1%, at 24,701.22, and the AIM All-Share was up 2.34 points, 0.3%, at 760.83.

The Cboe UK 100 was down 0.2% at 1,057.90, the Cboe UK 250 was down 0.2% at 21,706.64, and the Cboe Small Companies was marginally higher at 18,915.04.

In European equities on Wednesday, the CAC 40 in Paris was up 0.1%, while the DAX 40 in Frankfurt was down 0.1%.

In the UK, Chancellor John Healey is set to deliver his first budget at 1230 GMT, facing the challenge of balancing commitments to higher defence spending and easing household bills against limited fiscal headroom.

The budget comes against a difficult economic backdrop, with rising inflation and borrowing costs, largely driven by the US-Iran war, adding pressure to government finances, businesses and households.

UK annual inflation accelerated to 3.5% in September, partly reflecting soaring fuel prices amid the conflict.

"We can't stop these shocks that hit Britain, but we can make Britain more resilient when they do," Healey said in a statement released ahead of the budget.

"This budget is about getting through this difficult moment," he added, promising "breathing space" for households and "targeted support" for businesses.

Prime Minister Andy Burnham said on Monday that the budget would outline how the government intends to finance the defence investment programme announced by his predecessor.

However, Healey is expected to postpone until next year details of how the UK will meet Nato's target of increasing defence spending to 3.5% of gross domestic product by 2035.

Meanwhile, the Treasury said standing charges on household gas bills would be scrapped for around 23 million households in 2027, or as soon as possible thereafter, under plans to be outlined in the budget.

The fixed daily charges currently cost a typical household around £108 annually, regardless of gas consumption.

Healey will ask energy regulator Ofgem to remove the charges, with fixed costs instead incorporated into unit rates.

The Treasury estimates the change could save 60% of households an average of £45 a year.

Burnham said the measure would make energy bills fairer and give consumers greater control over their costs.

UK banking stocks were also in focus amid expectations that the sector could face higher taxes in the budget.

Standard Chartered topped the FTSE 100, jumping 4.4% after reporting stronger third-quarter profit and raising its guidance.

The London-based, Asia-focused lender said pretax profit increased 27% to USD2.25 billion in the three months ended September 30 from USD1.78 billion a year earlier.

Elsewhere in the sector, Barclays and Lloyds Banking Group both edged up 0.3%, while HSBC Holdings fell 0.6%.

European banks were also in focus following a series of earnings announcements.

UBS fell 1.4% in Zurich despite reporting higher third-quarter profit, supported by revenue growth and client inflows.

Santander dropped 3.3% in Madrid despite posting double-digit growth in third-quarter profit and revenue.

In the UK, Santander UK Group Holdings reported a 5.8% decline in pretax profit to £1.16 billion for the first nine months of 2026 from £1.23 billion a year earlier.

The decline reflected provisions for historical motor finance commission payments and higher restructuring costs, partly offset by a £96 million contribution from TSB.

Deutsche Bank was a brighter spot, rising 3.6% in Frankfurt after reporting a 7.7% increase in pretax profit to EUR2.63 billion.

Back in London, GSK was the biggest faller in the FTSE 100, dropping 3.5% after reporting a decline in third-quarter profit despite higher revenue.

The pharmaceutical company said pretax profit fell 21% to £1.94 billion from £2.46 billion a year earlier, while revenue rose 4.0% to £8.89 billion from £8.55 billion.

Operating profit declined 18% to £2.13 billion from £2.59 billion, reflecting restructuring charges of £328 million and lower other net operating income.

Unilever was the second-worst performer in the blue-chip index, falling 2.6% despite upgrading its full-year 2026 outlook for underlying volume growth to at least 3.0%, following strong third-quarter trading.

The consumer goods company declared a third-quarter dividend of EUR0.4664 per share, unchanged from the second quarter and up 3.0% year-on-year.

In the FTSE 250, Hunting plunged 13% after cutting its full-year 2026 adjusted earnings before interest, tax, depreciation and amortisation guidance to between USD128 million and USD133 million.

The energy services company cited disruption from the ongoing Middle East conflict, slowing activity in North America and supply chain issues affecting its Advanced Manufacturing business.

Hunting said reduced drilling activity in Saudi Arabia and logistical disruption across the Middle East were weighing on its Hunting Titan and Asia Pacific operations.

The pound was quoted at USD1.3291 early Wednesday, lower than USD1.3307 at the London equities close on Tuesday. Against the euro, sterling rose to EUR1.1950 from EUR1.1943.

The euro fell to USD1.1125 early Wednesday from USD1.1142 late Tuesday. Against the yen, the dollar edged down to JPY157.72 from JPY157.88.

In Asia on Wednesday, the Nikkei 225 index in Tokyo closed up 1.1%. In China, the Shanghai Composite ended 0.9% higher, while the Hang Seng index in Hong Kong gained 0.2%. The S&P/ASX 200 in Sydney closed down 0.7%.

In the US on Tuesday, Wall Street ended higher, with the Dow Jones Industrial Average marginally higher, the S&P 500 up 0.6% and the Nasdaq Composite gaining 1.2%.

Investors are also awaiting the US Federal Reserve's latest monetary policy decision, due at 1800 GMT on Wednesday, followed by a press conference with Chair Kevin Warsh.

Markets widely expect the Federal Open Market Committee to leave interest rates unchanged following last month's increase, although another hike in December is already being anticipated as elevated energy prices keep inflation above target.

The yield on the US 10-year Treasury was quoted at 5.01% early Wednesday, widening from 5.00% on Tuesday. The yield on the US 30-year Treasury widened to 5.32% from 5.31%.

Brent oil was trading at USD110.94 a barrel early Wednesday, lower than USD114.13 late Tuesday, as diplomatic efforts to ease tensions in the Middle East continued despite renewed Houthi attacks.

Senior officials from Saudi Arabia, Turkey and Pakistan met Iranian officials in Tehran on Monday in an attempt to de-escalate the conflict.

The talks came as Yemen's Houthis launched further attacks on Saudi Arabia, while Egypt approved defence support for the Gulf kingdom.

Gold was quoted at USD4,056.00 an ounce early Wednesday, slightly lower than USD4,057.67 on Tuesday.

Still to come on Wednesday's economic calendar, Ireland publishes gross domestic product and retail sales data.

In North America, US wholesale inventories figures are due, ahead of interest rate decisions from the Bank of Canada and the US Federal Reserve.

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