The FTSE 100 index closed down 80.79 points, or 0.8%, at 10,686.54 on Tuesday, as investors positioned themselves ahead of Wednesday's Budget announcement and the US Federal Reserve's interest rate decision. The decline came despite stronger performances elsewhere, with the FTSE 250 rising 215.12 points, or 0.9%, to 24,716.37, and the AIM all-share advancing 5.31 points, or 0.7%, to 758.49. European markets showed resilience, with the CAC 40 in Paris climbing 0.6% and the DAX 40 in Frankfurt rising 0.8%, while US equity markets rallied, with the S&P 500 up 0.7% and the Nasdaq Composite gaining 1.3%.
Losses in two FTSE 100 heavyweights drove the index lower. HSBC fell 5.4% after its third quarter results disappointed investors. The Asia-focused lender reported constant currency revenue of 18.62 billion dollars, up 4.8% from 17.76 billion dollars, but below the 18.93 billion dollars consensus. Banking net interest income reached 11.66 billion dollars, up from 11.05 billion dollars but missing the 11.90 billion dollars consensus. Bank of America characterised the numbers as soft, while Citigroup analyst Andrew Coombs called the results mixed. Jefferies analyst Joseph Dickerson highlighted that deposit commentary was incrementally cautious, with the bank flagging emerging customer and competitive pressure on deposits in Hong Kong and the UK.
Reckitt Benckiser declined 4.9% after lowering its full-year guidance. The Uxbridge-based consumer goods firm, which produces Nurofen painkillers, Strepsils throat sweets and Dettol antiseptic, now expects full-year 2026 like-for-like revenue growth for its core business of 3.5% to 4.5%, down from its previous guidance of 4.0% to 5.0%. The company blamed manufacturing constraints affecting household cleaning and disinfecting product Lysol in North America and slower growth in China's vitamins, minerals and supplements market. Third-quarter sales missed expectations due to an unexpected slowdown in the US. RBC Capital Markets analyst James Edwardes Jones said the results reinforce perceptions that Reckitt is inherently unpredictable.
On currency and commodity markets, the pound traded at 1.3307 dollars, down from 1.3353 dollars. Brent crude fell to 114.13 dollars a barrel from 117.02 dollars, following talks between Saudi Arabia, Turkey and Pakistan with Iranian officials aimed at reducing regional tensions. Gold rose to 4,057.67 dollars an ounce from 4,017.92.
Looking ahead, Sue Noffke, manager of the Schroder Income Growth Fund, said UK equities needed a Budget that avoided doing harm. After two years in which businesses absorbed significant cost and tax increases, another broad corporate burden increase risked undermining investment and growth the Government wanted to encourage. She said a relatively uneventful budget delivering policy stability and confidence would not be a bad outcome. On Wednesday, investors will also learn whether the Federal Reserve holds interest rates steady. The Conference Board's Consumer Confidence Index rose 7.5 points to 91.7 in October, defying analyst expectations of a drop.
For UK savers, borrowers and businesses, the outcome of Wednesday's Budget and the Fed's rate decision will shape borrowing costs and investment prospects over coming months.