UK Market Breakdown: Banks Jump as Defence Slides, Week of 2 November 2026

London's banks delivered the week's defining move. On Wednesday the FTSE 100 jumped 1.79% to close at 10,829.21, its biggest one-day percentage gain since early May, as bank shares rose 4.48% as a sector — their best single session in nearly six months — on the near-universal expectation that the Bank of England would raise Bank Rate on Thursday. Higher rates widen the margin lenders earn on deposits, and traders positioned accordingly.

That rally rescued a week that had started awkwardly. Monday brought a slump in the oil price on hopes of an end to the US-Iran war, which lifted airlines and housebuilders but hammered the energy majors. Tuesday brought the reverse: renewed US strikes near the Strait of Hormuz pushed crude back up, a global equity selloff took hold, and the FTSE 100 fell 1.14% in its steepest one-day drop in a month.

Across the three completed sessions, Monday's open to Wednesday's close, the FTSE 100 gained about 0.9% from Friday's 10,729.78, and the FTSE 250 added roughly 1.9% from 24,453.36. Sterling finished Wednesday at a seven-week high.

The FTSE 100

The index moved in three distinct steps. Monday was a grind higher: a fourth consecutive advance, up 0.29% to 10,761.33, achieved despite — in fact because of — a sharp fall in crude. Brent slid from $117.61 late on Friday to about $105.09 by the London close after Iran signalled it was ready to reopen the Strait of Hormuz within two days if the US agreed to end the war. The energy sector fell 3.3% and was comfortably the weakest part of the market, but travel and leisure, construction and materials, and consumer products all rose as investors priced in cheaper fuel and cheaper inputs.

Tuesday undid it. With Americans voting and crude turning back up after US strikes on Iran's Qeshm Island, London closed down 1.14% at 10,638.43, snapping the four-day winning streak and making it the weakest major European benchmark on the day. Miners and banks did most of the damage.

Wednesday reversed Tuesday twice over. The Democrats' sweep of the US midterms weakened the dollar, and that single move drove two separate London trades. Precious metals rallied — gold up 2.9% and silver up 4.4% on the session — carrying the gold and silver miners with them, while copper added 0.6%. At the same time the big five banks rose between 3.6% and 5.4%, with HSBC, Standard Chartered, NatWest Group, Lloyds Banking Group and Barclays all participating. Defence was the conspicuous loser, on the view that a Democratic Congress will scrutinise large US military commitments more closely. The close of 10,829.21 was a two-week high.

The FTSE 250 and mid caps

The mid-cap index had the better week of the two, and for a more domestic reason. Monday's 1.4% rise to 24,795.85 was the single best session of the three, driven by exactly the cohort that benefits from cheaper energy and lower input costs: housebuilders, travel operators and consumer-facing businesses. Falling crude does far more for a mid-cap leisure group's cost base than it does for an index that holds Shell and BP near the top.

Tuesday's global risk-off move cost the FTSE 250 only 0.47%, closing at 24,680.55 — a notably smaller fall than the FTSE 100's 1.14%, because the mid-cap index carries much less exposure to oil majors and diversified miners. Wednesday added 0.98% to 24,915.69, a two-month high, leaving the index up around 1.9% over the three sessions and roughly double the FTSE 100's gain.

Among smaller companies, the clearest development was corporate rather than directional. The Takeover Panel's disclosure table shows Gresham House Energy Storage Fund entering an offer period on Monday 2 November, with its potential bidder facing a deadline of Friday 6 November to announce a firm intention to bid or walk away. Harworth, meanwhile, is on its way out of London altogether after Peel's 187p-a-share offer, which valued the land and property developer at about £631.7m.

The week's biggest movers

BAE Systems was the week's most consequential faller. The shares dropped more than 5% in early trade on Wednesday, the group's second-sharpest one-day fall in about six months, after the midterm result was read as a setback for US defence spending plans. The selling was sector-wide across Europe, and in London Babcock International fell with it — having been among Tuesday's biggest risers, a reversal that shows how specific the midterm trade was.

Weir fell roughly 7% on Wednesday despite reporting third-quarter orders up 8% at constant currency and reaffirming full-year guidance. The problem was the composition: organic order growth of 5% struck analysts as thin against peers, and Jefferies said the intake was not strong enough to excite the market in the near term. Weir also flagged weaker demand from phosphate customers, about 4% of group revenue, and disruption at Chilean mines.

Lion Finance was the standout riser, up about 5.8% to 12,810p on Wednesday after third-quarter profit rose 21.0% to GEL 661.9m, with return on average equity of 27.2%.

Fresnillo and Endeavour Mining rode the precious-metals move, up 5.3% and 4.6% respectively by mid-morning on Wednesday as the softer dollar lifted bullion. Antofagasta, a copper rather than precious-metals producer, had been among Tuesday's biggest fallers before recovering ground on Wednesday — the gap between the two trades was the clearest sector signal of the week.

Barratt Redrow closed Tuesday down 4.7% at 319.0p, among the FTSE 100's heaviest fallers, before its AGM trading statement the following morning. Ithaca Energy led Monday's energy rout with a 5.9% fall, ahead of BP at 4.4% and Shell at 2.9%, as Brent gave up more than $12 a barrel from Friday's level.

Company news in focus

Unilever set out the week's largest restructuring on Tuesday, committing to cut €1bn of costs by the end of 2029 and overhaul its operating model through 2027. The programme is largely a response to the separation of the food business: the company had previously guided to €400m-€500m of stranded costs from that deal, with the balance of €500m-€600m expected to reach the bottom line. Markets will be grouped into regional performance units run by presidents with full profit-and-loss responsibility, and the group will report in three categories — beauty and personal care, home care, and other. Chief executive Fernando Fernandez described the model as a centralised global strategy with excellence in local execution, and Unilever reaffirmed its medium-term goal of 4-6% annual underlying sales growth with at least 2% volume growth. Fuller detail followed at a capital markets day on Wednesday.

London Stock Exchange Group began a buyback of up to £650m, announced by RNS on Monday 2 November, alongside an increased dividend. NatWest Group confirmed its 2026 buyback programme is complete, with its final London purchases made on Tuesday. Smith+Nephew disclosed that its board is exploring strategic options for the Orthopaedics division, the clearest structural signal from a FTSE 100 company this week, and said $250m of its $500m buyback was done by the end of the third quarter. Barratt Redrow reiterated a £400m capital return for FY27, including a buyback of about £386m, and its 1.0p final dividend is payable on 13 November. BP completed the sale of its stake in Castrol to Stonepeak.

Earnings and trading updates

Marks and Spencer produced the strongest set of numbers. Adjusted pre-tax profit for the half year to 26 September more than doubled to £403.2m from £184.1m, on total sales up 16.2% to £9.2bn, as the business lapped the prior year's cyber-attack disruption. Food sales grew 11.7% and the fashion, home and beauty arm 17.5%. Management said it remains on track for full-year adjusted pre-tax profit in line with market expectations and plans £750m of investment this year. The shares rose on the day.

Associated British Foods was the week's clearest disappointment, falling 2.2% on Tuesday as full-year adjusted operating profit dropped 14% to £1,508m and adjusted earnings per share fell 11% to 156.0p. Primark's UK like-for-like sales grew just 0.5%, and the sugar division remains loss-making.

Smith+Nephew cut guidance alongside third-quarter revenue of $1,551m, up 3.4%. It now expects full-year underlying revenue growth of around 3%, against around 4% previously, and trading profit growth of around 4% rather than around 8%, citing US hips and knees and market conditions. Orthopaedics grew 2.5% to $590m. The shares opened about 2.5% lower at 1,089p.

Hiscox rose around 3% on Tuesday after nine-month insurance contract written premiums rose 9.5% to $4.44bn from $4.05bn, with retail premiums up 11.9% to $2.25bn and London Market up 9.9% to $1.05bn despite rates there falling 5%. Coca-Cola HBC nudged its full-year organic revenue guidance slightly above the previous 6-7% range after third-quarter organic revenue grew 9.0%, though the shares were marginally lower at 4,742p in early trade on cost pressures and a fall of more than 20% in Ukraine volumes. JD Wetherspoon reported like-for-like sales up 8.2% over 14 weeks, slowing to 7.5% in the most recent five, and Trainline lifted half-year adjusted EBITDA 7% to £100m on revenue of £233m, down 1%, with its international consumer business profitable for the first time.

Macro and the Bank of England

The macro calendar was quiet by design: the significant UK data and the Bank of England decision both fell outside the Monday-to-Wednesday window, which left rate expectations rather than rate news driving the market.

Bank Rate stood at 3.75% through the three sessions, and a quarter-point increase to 4.00% was widely expected at Thursday's decision — prediction-market pricing put the probability at roughly 93%. That expectation is what powered Wednesday's bank rally, and it comes after September inflation ran hotter than forecast at 3.5%. Market pricing read from SONIA futures on Monday implied Bank Rate rising toward about 4.4% by May 2027.

Gilts rallied. The 10-year yield fell to 5.16% on Wednesday, down 9 basis points on the session and 24 basis points over the past month, tracking US Treasuries lower after the midterm result. Sterling gained 0.43% on Wednesday to $1.3472, a seven-week high, driven more by dollar weakness than by anything domestic. The combination mattered for London's composition: a softer dollar flatters the sterling value of the index's dollar earners, which is part of why the miners did the heavy lifting on the same day the banks rallied on a purely domestic rate story.

Still to come

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