Banking stocks helped the FTSE 100 move higher on Tuesday after reports suggested the sector will avoid a fresh tax squeeze in Wednesday’s budget.
The relief was enough to put London equities in a firmer mood, even with a heavy dose of US data clouding the global backdrop.
The FTSE 100 closed up 0.8% at 9,609.53. The FTSE 250 gained 1.0% to 21,617.41 and the AIM All-Share rose 0.7% to 742.09.
Lloyds climbed 3.8%, NatWest added 3.7% and Barclays rose 2.4% after an FT report signalled that Chancellor Rachel Reeves is unlikely to hit banks with additional taxes.
Markets had been bracing for another raid, so even a hint of restraint provided support. Reeves will unveil the budget around 12:30 GMT on Wednesday, and expectations remain high for another round of tough revenue-raising measures to plug the deficit.
An extension of the freeze on personal allowances, a mansion tax, higher betting duties and tighter salary sacrifice rules are all being talked about. Reports also suggest a potential stamp duty holiday for new London Stock Exchange listings, although economists warn the broader policy mix feels scattershot.
In London, Beazley fell 9.2% after setting aside $500 million to build a new Bermuda platform, a move analysts say could significantly curb share buyback potential this year. RBC flagged the capital commitment as the key development, while UBS warned its previous $700 million buyback expectation is now at risk.
Kingfisher surged 6.0% after lifting profit guidance for the second time in three months, now expecting adjusted pretax profit of £540 million to £570 million. On the FTSE 250, AO World rose 1.5% as it guided profit toward the top of its expected range.
Baltic Classifieds slipped 2.2% after JPMorgan cut the stock to underweight, arguing that online classifieds firms will need to ramp up investment to stay ahead of AI-driven search competition.
Wall Street was mixed by the London close, with the Dow up 0.7% and the S&P 500 steady, while the Nasdaq slipped 0.2%. A backlog of US data arrived following the shutdown, painting a patchy picture. Producer prices rose 2.7% on-year in September, matching expectations, while retail sales disappointed with a 0.2% monthly rise. Consumer confidence weakened as well, hitting its second-lowest reading since April. Markets now price in an 83% chance of a quarter-point rate cut in December.