Lunchtime market roundup: HSBC drags FTSE 100 lower ahead of budget

The FTSE 100 was Europe's laggard on Tuesday, going into the afternoon on the decline as HSBC weighed, but the more domestic-focused FTSE 250 was in the green, on the eve of the UK government budget.

The FTSE 100 index was down 82.35 points, 0.8%, at 10,684.98. The FTSE 250 was up 124.81 points, 0.5%, at 24,626.01, and the AIM All-Share was up 1.40 points, 0.2%, at 754.58.

The Cboe UK 100 was down 0.9% at 1,059.65, the Cboe UK 250 was up 0.5% at 21,674.28, and the Cboe Small Companies was down 0.1% at 18,866.78.

In European equities on Tuesday, the CAC 40 in Paris was up 0.4%, while the DAX 40 in Frankfurt gained 0.3%.

In the UK, Chancellor John Healey is preparing to deliver his first budget on Wednesday, with more than £20 billion in investment plans and modest tax increases expected as the government seeks to bolster economic growth while reassuring bond investors.

Healey, who replaced Rachel Reeves following Andy Burnham's appointment as prime minister, is due to present the fiscal statement shortly after Prime Minister's Questions, at around 1230 GMT.

The budget comes against a challenging economic backdrop, with higher borrowing costs, persistent inflation and the impact of the US-Iran war putting pressure on public finances and household budgets.

Since the government's spring statement in March, rising gilt yields and higher interest rate expectations are thought likely to have eroded much of the £23.6 billion in fiscal headroom previously projected.

The yield on UK 10-year government bonds, which had approached 4.20% before the outbreak of the conflict, surged above 5.50% earlier this month, reaching a 19-year high.

Meanwhile, UK annual consumer price inflation accelerated to 3.5% in September from 3.1% in August, with the Bank of England widely expected to raise interest rates by a quarter percentage point to 4.00% next week.

The pound was quoted at USD1.3321 at midday Tuesday, lower than USD1.3353 at the London equities close on Monday. Against the euro, sterling rose to EUR1.1951 from EUR1.1940 a day earlier.

The euro fell to USD1.1150 from USD1.1183 late Monday. Against the yen, the dollar strengthened to JPY157.70 from JPY157.53.

In the FTSE 100, Rentokil Initial was among the leading gainers, rising 2.2% after launching a USD200 million share buyback programme.

Antofagasta advanced 1.6% after Deutsche Bank Research upgraded the mining company to 'hold'.

At the other end of the blue-chip index, HSBC Holdings plunged 7.5% after reporting weaker-than-expected income, despite a sharp increase in third-quarter profit.

The Asia-focused lender said pretax profit jumped 32% to USD9.63 billion in the three months ended September 30 from USD7.30 billion a year earlier.

HSBC also maintained its third-quarter dividend at USD0.10 per share and announced a new USD1 billion share buyback programme, which it aims to complete before its 2026 results.

Reckitt Benckiser Group fell 4.0% after cutting its full-year outlook amid an unexpected slowdown in US sales.

The consumer goods group lowered its 2026 like-for-like revenue growth guidance for its core business to between 3.5% and 4.5%, citing manufacturing constraints affecting Lysol in North America and slower growth in China's vitamins, minerals and supplements market.

Third-quarter net revenue fell 6.9% on a reported basis to £3.36 billion, although like-for-like sales increased 3.2%.

In the FTSE 250, Vistry Group gained 3.8% after appointing Severn Trent Chief Financial Officer Helen Miles as its next CFO.

Miles is expected to join the housebuilder during 2027, while Robert Allen has been appointed interim CFO and board director with immediate effect.

Severn Trent shares were down 0.6%.

Among smaller companies, Zenith Energy climbed 9.2% after appointing former US Secretary of State Mike Pompeo and his advisory firm, CNQ Global Advisors, as strategic advisers in connection with a USD573 million international arbitration claim against Tunisia.

Shoe Zone plunged 22% after the footwear retailer forecast a swing to an adjusted pretax loss of around £1.0 million for the 53 weeks ended October 3, compared with a profit of £2.4 million a year earlier.

The company said the expected loss was in line with management expectations.

Revenue fell 4.5% to £142.4 million from £149.1 million, reflecting weaker consumer confidence and a reduction in its store estate to 251 shops from 269.

Stocks in New York were called higher. The Dow Jones Industrial Average, S&P 500 and Nasdaq Composite were each called up 0.2%.

Coca-Cola shares fell 0.7% in premarket trading after the drinks giant raised its annual guidance following stronger-than-expected third-quarter sales, although growth in its largest market fell short of forecasts.

The Atlanta, Georgia-based company reported a 10% increase in consolidated net income to USD4.06 billion for the three months ended October 2 from USD3.70 billion a year earlier.

Revenue climbed 7.4% to USD13.38 billion from USD12.46 billion, exceeding the Visible Alpha consensus estimate of USD12.88 billion.

Organic revenue grew 7%, ahead of the 4.4% consensus forecast, supported by a 7% increase in concentrate sales and 1% growth in price and mix.

By region, organic sales increased 16% in Latin America, 7% in Europe, the Middle East and Africa, 3% in North America and 6% in Asia Pacific.

The yield on the US 10-year Treasury was quoted at 5.00%, widening from 4.98% on Monday. The yield on the US 30-year Treasury widened to 5.31% from 5.30%.

Brent oil traded at USD114.84 a barrel at midday Tuesday, lower than USD117.02 late Monday, as diplomatic efforts to ease tensions in the Middle East continued amid renewed Houthi attacks.

Saudi Arabia, Turkey and Pakistan held talks with Iranian officials in Tehran on Monday aimed at reducing regional tensions.

Saudi Arabia said the visit was intended to establish open negotiating channels to "prevent the return of military escalation".

Gold was quoted at USD4,012.47 an ounce at midday Tuesday, lower than USD4,017.92 on Monday.

Still to come on Tuesday's economic calendar are US building permits, durable goods orders, consumer confidence, the Richmond Fed manufacturing index and new home sales figures.

The US Federal Open Market Committee also begins its two-day monetary policy meeting.

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