UK Market Breakdown: Banks Rally, Builders Slump, Week of 26 October 2026

London's blue chips finished Wednesday almost exactly where they started the week, but the three sessions in between were anything but quiet. The FTSE 100 closed Wednesday at 10,694.50, up 7.96 points on the day and just 4 points above Friday's 10,690.36 close — a gain of 0.04% for the week so far. Underneath that flat line sat a bank results shock, a pharma selloff and a Budget that rearranged the leaderboard in an afternoon.

Chancellor John Healey's first Autumn Budget, delivered on Wednesday, was the week's defining event. The bank corporation tax surcharge rose from 3% to 6% rather than the 8% trailed in press reports, and lenders rallied on the relief. Gambling operators did the same after the machine games duty rise landed well below the worst case. Housebuilders went the other way, falling 7% or thereabouts as the detail of a new first-time buyer scheme disappointed.

The mid caps had the better week. The FTSE 250 ended Wednesday at 24,639.26, up about 1.7% from Friday's 24,237.39 close, even after giving back 0.3% on Budget day.

The FTSE 100

Monday set an optimistic tone. The index closed up 0.7% at 10,767.33, with Reuters attributing the broad rally to Anthropic's US IPO filing, which lifted sentiment towards AI-exposed names after a run of selling over debt-funded AI infrastructure spending. Energy was the soft spot, down 0.8% as crude retreated from the five-month high hit the previous Friday on attacks on Saudi Arabia: Shell slipped 0.8% and BP 1.2%.

Tuesday undid all of it. The FTSE 100 fell 80.79 points, or 0.75%, to 10,686.54, its biggest one-day decline in roughly a month, dragged down by two sets of results. HSBC closed 5.42% lower at 1,291.40p and Reckitt fell 5.27% to 5,218.00p. Miners provided the only meaningful cushion: Antofagasta rose 4.32% to 3,311.00p, Rio Tinto added 2.51% to 6,400.00p and Anglo American gained 2.43% to 3,838.00p. BP was weaker again, down 18.1p at 612.7p as oil eased further on hopes of Middle East diplomacy.

Wednesday was a tug of war. GSK and Unilever were the two biggest drags after their third-quarter numbers, and the index sat about 0.3% lower at 10,652.43 in mid-morning trading. The Budget then flipped it: banks closed the session up roughly 4% as a sector and the index scraped out a 0.1% gain. Barclays, Lloyds and NatWest all rallied once the surcharge landed at 6% rather than the trailed 8%, with reported gains ranging from about 2.5% to just over 4% depending on the time of quote. The week to Wednesday's close was therefore about rotation rather than direction: banks, miners, defence and gaming up, oil majors, pharma and housebuilders down.

The FTSE 250 and mid caps

The mid-cap index did the heavy lifting. From Friday's 24,237.39 it jumped 1.09% on Monday to 24,501.25 — its biggest one-day rise since 9 October — then pushed on to 24,716.37 on Tuesday. On Wednesday it touched a near two-month high before reversing to close 77.11 points, or 0.3%, lower at 24,639.26, as housebuilding constituents were marked down after the Budget. Persimmon fell 6.9% on the day.

Two mid-cap stories were company-specific. Vistry rose about 4% to 266p on Tuesday after naming Helen Miles, chief financial officer of Severn Trent, as its next CFO; Robert Allen, formerly of The Crown Estate, joins immediately as interim CFO while Miles works out a 12-month notice period. NCC Group eased around 2% to roughly 171p despite saying revenue for the year to 30 September would be in line with expectations and adjusted EBITDA ahead of them; the same statement named chief financial officer Guy Ellis as chief executive, replacing Mike Maddison with immediate effect.

Further down the market, the FTSE AIM All-Share closed Wednesday at 760.92, up 0.32%, having fallen 3.3% the previous week. Harworth is leaving London altogether: acceptances of Peel Pepper's best and final cash offer now exceed 90% of the issued share capital, the offer closes on 10 November and the shares are expected to be delisted the next day.

The week's biggest movers

Computacenter was the week's cleanest winner, up about 13% to 5,190p on Monday after raising its 2026 adjusted pre-tax profit forecast to at least £425m, against a company-compiled consensus of £387.1m.

Rank Group led Wednesday's gambling rally, up around 12% by the close. The Budget raised machine games duty on Category B machines from 20% to 25% from 1 April 2027, far short of the 40% campaigners had pushed for. Entain rose 3.6%, though reported sector moves varied with the time of quote: the trade press put Entain's gain at more than 6.5% to 482.5p and Evoke's at nearly 3.5% to 44.5p. JPMorgan called the rise "a relief versus worst-case fears".

Taylor Wimpey was the sharpest faller, down 7.3% on Budget day, with Persimmon off 6.9% and Barratt Redrow 6.6% lower. The new first-time buyer scheme replacing Help to Buy imposes income caps on applicants and requires developers to fund part of the subsidy, on a sliding scale starting at 1% for the first 100 homes sold, rising to 3% between 101 and 250 homes and 4% beyond that. The sector reversed a rally of roughly 9% built since the scheme was first trailed in September.

Rolls-Royce gained 6.1% on Monday, with BAE Systems up 4.1% and Babcock 6.4% higher, as aerospace and defence rebounded from Friday's slide, when Rolls-Royce had suffered its sharpest daily fall since April 2025 after French rival Safran warned on aftermarket growth. Reports that the Chancellor would borrow to fund military spending added to the move.

Company news in focus

Intertek used Wednesday's third-quarter update to confirm EQT's agreed takeover remains on track to complete in the fourth quarter of 2026 or the first quarter of 2027, with shareholder approval secured and some regulatory clearances outstanding. Shareholders are to receive £60 a share in cash plus the final dividend; Bloomberg valued the deal at £9.3bn when it was announced in June. Organic revenue grew 6.4% in the quarter, and because of the live bid the unchanged 2026 guidance formally constitutes a profit forecast under the Takeover Code, which the board confirmed remains valid.

Entain put a number on the Budget, estimating the duty rise will cost its UK retail business about £25m a year before mitigation, which it expects to offset by the end of 2028 through shop closures, cost savings and market share gains.

Deutsche Bank was busy in both directions on Tuesday. It lifted Antofagasta to hold from sell, arguing 2027 production guidance of 630-690kt had been appropriately reset to imply only modest growth, and the shares rose 4.32% to 3,311.00p. It cut Sainsbury's to hold on softer volume expectations and valuation, trimming its second-half like-for-like sales growth forecast to 1.8% from 3.6%; those shares fell about 1.1% in early trading.

In board changes, Severn Trent confirmed it will lose Helen Miles to Vistry, saying she would serve her full 12-month notice period to support an orderly handover.

Earnings and trading updates

HSBC was the week's biggest earnings casualty. Pre-tax profit jumped 32% to $9.6bn in the third quarter, flattered by the absence of a large legal provision booked a year earlier, but revenue missed forecasts and net interest income of $9.3bn, up 6% year on year, fell well short of what analysts had looked for. The wealth division was the sore point: revenue was flat at $2.7bn after growth of 15% and 23% in the first two quarters. Management reaffirmed rather than upgraded guidance, the chief financial officer noting that "there is sometimes a market expectation that we upgrade guidance or targets". The bank kept its buyback at up to $1bn and its dividend at $0.10 a share, both in the US dollars it reports in. The shares fell almost 7% intraday before closing 5.42% lower.

Reckitt cut its full-year outlook. Core like-for-like sales rose 3.3% in the quarter against the 3.6% expected in a company-compiled poll, and the full-year growth range came down to 3.5%-4.5% from 4%-5%. A supply disruption affecting Lysol in North America was the main culprit, with slower growth in China's vitamins and supplements category also cited. Jefferies called the update "not a good" one.

GSK beat and still fell. Core earnings came in at 54.6p a share against expectations of 50.4p, on revenue of about £8.89bn, and the company held its 2026 guidance — turnover growth in the upper half of its 3%-5% range and core EPS growth in the lower half of its 7%-9% range. Investors focused on vaccines, where sales of £2.58bn missed forecasts of £2.61bn, and on the £1.9bn cost-savings programme announced in July. The shares closed 4.8% lower, having been down as much as 5.4% in early trading.

Unilever also beat and also fell, slipping on Wednesday despite underlying sales growth of 5.2% against a 4.8% consensus and volume and mix growth of 2.9%. The company lifted its 2026 volume growth outlook to more than 3% while keeping underlying sales growth guidance at 4%-6%. Foods remained the weak link, with sales broadly flat and volumes down 1.1%, and developed markets lagged.

Standard Chartered was the bright spot, reporting on Wednesday a record quarter with income up 14% and pre-tax profit up 29% to $2.3bn, and lifting full-year return on tangible equity guidance to around 14%. The shares rose about 2.7%.

Macro and the Bank of England

The Budget was the macro event, and markets took it calmly. Ten-year gilt yields fell 2.1 basis points to 5.321% according to Tradeweb, having touched 5.52% earlier in October — the highest since 2007 — while the 30-year sat near 5.70% after spiking above 6% earlier in the month. Sterling barely moved, quoted 0.1% lower at $1.3291. Keeping the fiscal rules intact helped contain the reaction, though the cushion is thinner: fiscal headroom was put at about £15bn, down from £24bn in March.

Beyond the bank surcharge, the Budget raised tax on savings and property income by two percentage points from April 2027, extended the zero VAT rate on household electricity and the 5p fuel duty cut to 1 July 2027, and funded a £15bn Defence Investment Plan plus £10bn of aid for Ukraine.

The inflation backdrop remains uncomfortable. September CPI, published on 21 October, came in at 3.5%, up from 3.1% in August and above the 3.4% consensus, with core at 2.8%. The British Retail Consortium's shop price monitor, out on Tuesday, showed shop price inflation accelerating to 2.1% from 1.4%, a two-and-a-half year high, with food at 2.9% and non-food at 1.7%. The Federal Reserve held its target range at 3.75%-4% on Wednesday in a 10-2 vote, with both dissenters wanting a hike — a hawkish hold that did nothing to argue against UK rate expectations, which went into Thursday pricing a November rise as the clear favourite.

Still to come

The 5 November decision is the fixture that matters most: Bank Rate has been held at 3.75% since December 2025, the September vote split 6-3 for no change, and September's inflation overshoot has firmed expectations of a quarter-point move.

This article is for information and education only. It is not financial advice or a recommendation to buy, sell or hold any investment. Always do your own research.