FTSE 100 falls as banks lead declines in London trading

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FTSE 100 falls as banks lead declines

Highlights

FTSE 100 drops 0.8% to 10,680.25 by 1006 GMT as banks fall nearly 2% to a four-month low and cyclicals underperform.
Brent crude hits a five-month high of $111.05, fueling defensive rotation with healthcare up 0.5% and personal care, drug and grocery sector up 0.3%.
Bank of England rate hike expectations strengthen after data shows modest pay growth and jobs recovery, putting pressure on rate-sensitive FTSE 250 midcaps.

Bank shares and cyclicals pressure indexes

As reported by Reuters, the FTSE 100 is down 0.8% at 10,680.25 by 1006 GMT, while the FTSE 250 loses 1% and is on course for its biggest one-day decline in nearly two weeks.

Banks are the biggest drag on the blue-chip index, falling nearly 2% to an over four-month low. HSBC, Lloyds and NatWest are down between 1.6% and 2.3%, while industrial stocks lose 1.8%, with Diploma and Rolls-Royce falling 3.3% and 1.7% respectively.

Bunzl slips 2.2% despite reporting a 3.7% increase in third-quarter revenue and keeping its annual guidance unchanged. Miner Anglo American also falls 1.6% after maintaining its 2026 copper production guidance despite a 5% drop in third-quarter copper output.

Defensive buying and policy outlook shape sentiment

Elevated oil prices continue to weigh on markets, with Brent crude reaching a five-month high of $111.05 a barrel. At the same time, investors are moving into traditionally defensive areas, lifting healthcare 0.5% and the personal care, drug and grocery sector 0.3%.

Fresh data shows a modest rise in pay growth for British workers and signs of a small recovery in the jobs market, reinforcing the case for a Bank of England interest rate hike next month and adding pressure to rate-sensitive midcaps. Markets are also watching UK inflation and retail sales data due later this week as another corporate earnings season begins.

Separately, The Times reports that Finance Minister John Healey rejects calls to raise capital gains tax ahead of his October 28 budget, amid concerns that higher taxes could encourage wealthy individuals to leave Britain or delay asset sales. On the stock-specific side, Ocado climbs 6.6% to lead the FTSE 250 after J.P. Morgan raises its price target on the shares to 460 pence from 290 pence.

Our earlier coverage on Bank of England rate expectations explained how persistent inflation and firmer UK economic data have shifted forecasts toward a November increase in the Bank Rate to 4.0%. It also noted that policymakers are weighing still-elevated price pressures and market volatility, keeping investors focused on upcoming UK inflation and labour-market signals.

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