The FTSE 100 fell 1% on Tuesday, 27 October 2026, as a decline in HSBC Holdings (LSE:HSBA) weighed on UK banking shares, while investors assessed developments in the Middle East ahead of the UK Autumn Budget and the Federal Reserve’s monetary policy decision.
At 08:20 GMT, London’s benchmark index was trading approximately 1% lower, alongside declines across major European equity markets. Germany’s DAX fell 0.19%, while France’s CAC 40 declined 0.40%.
Sterling weakened 0.14% against the US dollar to $1.3323, reflecting a session in which investors were monitoring UK fiscal policy, interest rate expectations and geopolitical developments.
HSBC was among the principal contributors to the FTSE 100’s decline after its third-quarter results prompted a fall of more than 6% in its shares. Other UK-listed banks also traded lower.
Meanwhile, oil prices advanced amid continued tensions involving Iran and the United States, while gold prices declined.
HSBC Shares Fall Following Third-Quarter Results
HSBC Holdings (LSE:HSBA) shares declined more than 6% on Tuesday after the bank reported third-quarter financial results that fell slightly below analyst expectations.
The shares reached an intraday low of 1,269.20p.
HSBC reported pretax profit of $9.63 billion for the July-to-September period, representing an increase of 32% from a year earlier but below the approximately $9.7 billion expected by analysts.
The bank also reported a decline in its Common Equity Tier 1 capital ratio to 13.9%, compared with 14.1% previously.
The CET1 ratio is a measure of a bank’s core equity capital relative to its risk-weighted assets and is used to assess regulatory capital strength.
HSBC announced a further share buyback programme of up to $1 billion and maintained its interim dividend at $0.10 per share.
However, the capital ratio movement and earnings figures coincided with a decline in the bank’s share price.
Given HSBC’s weighting in the FTSE 100, the fall contributed to the broader index decline.
UK Banking Shares Decline Alongside HSBC
Other major UK-listed banking groups also traded lower during the session.
Standard Chartered (LSE:STAN) fell 1.74%, while NatWest Group (LSE:NWG) declined 1.02%.
Barclays (LSE:BARC) recorded a smaller decrease of 0.17%.
The declines occurred as investors assessed HSBC’s results and the outlook for the banking sector ahead of the UK Budget.
Banking stocks remain sensitive to changes in interest rates, credit conditions, capital requirements and taxation.
Standard Chartered was also approaching its own third-quarter results announcement, scheduled for Wednesday.
The simultaneous declines across several banking stocks added to the downward pressure on the FTSE 100.
UK Budget Approaches as Shop Price Inflation Accelerates
Investors were also preparing for the UK Autumn Budget, scheduled for Wednesday, 28 October.
The announcement comes against a backdrop of rising shop price inflation and continued debate over the government’s fiscal position.
The British Retail Consortium reported that shop price inflation increased to 2.1% in October from 1.4% in September.
The latest figure represented the highest rate in approximately two and a half years.
The increase adds to the economic information available to policymakers ahead of the Budget.
British Retail Consortium Chief Executive Helen Dickinson called on the Chancellor to “act now” in response to the pressures facing retailers.
Financial markets are also assessing the government’s ability to maintain its fiscal rules while addressing public spending and taxation requirements.
Mohit Kumar, Chief European Economist at Jefferies, commented on the outlook for UK government bonds:
“Optically we see the Chancellor sticking to the fiscal rules and the budget would be more of a clearing event. However, we remain worried about the medium term fiscal situation in the UK. We are still staying away from the long end and have a long position in the front end of the curve,” Kumar said in a note.
His comments reflected Jefferies’ preference for shorter-dated UK government bonds over longer maturities.
The Budget is expected to provide further information on fiscal policy, taxation and government borrowing plans.
Federal Reserve Decision Adds to Market Uncertainty
The Federal Reserve’s monetary policy meeting was another focus for investors on Tuesday.
The US central bank’s two-day meeting comes as financial markets assess inflation, economic growth and the direction of interest rates.
Investors are monitoring whether policymakers will signal changes to their assessment of inflation risks or the outlook for monetary policy.
Interest rate expectations can influence equity valuations, bond yields and currency markets internationally.
For UK equities, developments in US monetary policy are relevant to global funding conditions and the performance of internationally exposed companies.
The Federal Reserve’s decision is scheduled to coincide with the UK Budget on Wednesday, placing two significant policy announcements within the same trading period.
Middle East Tensions Continue Despite Diplomatic Discussions
Developments involving Iran, the United States and regional governments remained a focus for financial markets.
Iran’s Foreign Ministry criticised Washington’s approach to negotiations, with spokesman Esmaeil Baghaei accusing the United States of “not being serious” about diplomatic discussions.
Baghaei also stated that Tehran had “never closed the door” to diplomacy.
Iranian President Masoud Pezeshkian was travelling to Russia for talks, while diplomatic discussions involving Saudi Arabia, Pakistan and Türkiye continued.
Officials from those three countries met Iranian representatives in Tehran on Monday.
The discussions ended without a substantive public agreement, although the parties agreed to continue negotiations.
US President Donald Trump, speaking during a campaign appearance in Mississippi on Monday, said Iran “started the war” and described an earlier ceasefire as “a waste of time.”
Trump has ruled out additional strikes before the US midterm elections on 3 November.
Jefferies nevertheless identified the possibility of renewed military action around or after the election.
The developments contributed to uncertainty surrounding the regional security outlook and international energy markets.
Maritime Incident and Missile Interceptions Add to Regional Risks
Security developments in the Middle East also included reports of military activity and a maritime incident near Iraq.
The United Kingdom Maritime Trade Operations centre reported that a vessel was on fire approximately 63 nautical miles southeast of al-Faw, Iraq.
The report added to attention on maritime security in waters used for international commercial shipping.
Separately, the Saudi-led coalition said it had intercepted three Houthi ballistic missiles targeting Saudi Arabia’s Eastern Province.
The coalition also reported intercepting four drones heading towards southern Saudi Arabia.
The US Embassy in Riyadh renewed its recommendation that non-emergency personnel leave Saudi Arabia, citing attacks by Iranian-supported Houthi forces.
Abdollah Haji Sadeghi, an aide to Iran’s supreme leader, warned that further US military action would face a “harsher and more devastating” response.
These developments occurred alongside diplomatic efforts aimed at reducing regional tensions.
The potential implications for energy supply and transportation remained relevant to commodity markets.
Brent Crude Rises Above $111 Per Barrel
Oil prices increased on Tuesday as investors assessed the possibility of further disruption to energy supplies.
Brent crude futures for January delivery rose 0.57% to $111.36 per barrel.
West Texas Intermediate futures for December delivery increased 0.60% to $102.36 per barrel.
The gains occurred amid continued uncertainty over security conditions in the Middle East.
The region’s importance to global oil production and maritime transportation means developments affecting shipping routes and energy infrastructure can influence crude oil prices.
Higher energy costs can also affect inflation expectations, business operating expenses and household spending.
The increase in oil prices therefore formed part of the broader market backdrop ahead of the Federal Reserve’s monetary policy announcement.
Gold Prices Decline Despite Geopolitical Developments
Gold prices moved lower during Tuesday’s session.
December gold futures declined 0.63% to $4,013.27 per ounce.
Spot gold fell 0.41% to $4,000.15 per ounce.
The decline occurred despite continued geopolitical uncertainty in the Middle East.
Gold prices are influenced by several factors, including US interest rate expectations, bond yields, currency movements and demand for defensive assets.
Investors were also preparing for the Federal Reserve’s monetary policy decision, which could provide further information on the interest rate outlook.
Reckitt Reduces Full-Year Revenue Growth Forecast
Reckitt Benckiser Group (LSE:RKT) lowered its annual revenue growth expectations following its third-quarter trading performance.
The consumer goods company revised its full-year revenue growth forecast to between 3.5% and 4.5%.
Third-quarter like-for-like revenue increased 3.3%, below market expectations.
Reckitt attributed part of the performance to manufacturing constraints affecting its North American operations.
The revised outlook reflected the impact of these operational issues on sales.
The company did not provide additional financial figures in the supplied market update.
Vistry Appoints Helen Miles as Incoming CFO
Vistry Group (LSE:VTY) announced the appointment of Helen Miles as its next Chief Financial Officer.
Miles currently serves as CFO of Severn Trent (LSE:SVT) and is expected to join Vistry during 2027.
Her previous experience includes senior financial positions at HomeServe and Openreach.
Vistry also appointed Robert Allen as interim CFO with immediate effect, pending Miles’ arrival.
The appointments establish the company’s financial leadership arrangements for the transition period.
NCC Group Names Guy Ellis Chief Executive
NCC Group (LSE:NCC) announced the appointment of Guy Ellis as Chief Executive Officer.
Ellis previously served as the cybersecurity company’s Chief Financial Officer.
The leadership change accompanied a trading update in which NCC forecast adjusted core profit for fiscal 2026 ahead of market expectations.
The company has undergone changes to its business structure following the disposal of its Escode division.
NCC’s latest announcement provided an update on its financial performance and management arrangements following the transaction.
Informa Lowers Underlying Revenue Growth Outlook
Informa (LSE:INF) reduced its full-year underlying revenue growth forecast to approximately 3%, compared with its previous expectation of 6%.
The international events and information services company attributed the revision to further event rescheduling resulting from tensions in the Middle East.
The changes have affected the timing of revenue recognition associated with its events business.
Despite reducing its revenue growth outlook, Informa reaffirmed its full-year earnings growth target.
The announcement highlighted the operational impact of geopolitical developments on companies with activities in the region.
Outlook for UK Equities
The FTSE 100’s decline on Tuesday reflected a combination of company-specific developments and wider market factors.
HSBC’s quarterly results contributed to selling pressure in the banking sector, while investors assessed the potential implications of the UK Budget and the Federal Reserve’s monetary policy decision.
Developments in the Middle East remained relevant to oil prices, inflation expectations and companies operating in the region.
Corporate updates from Reckitt, Vistry, NCC Group and Informa also provided additional information on trading performance, management changes and financial guidance.
Attention will turn to Wednesday’s policy announcements and further corporate earnings releases for additional indications of the outlook for UK equities.
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