- FTSE 100 falls 39 points to 9,509
- HSBC deal receives lukewarm response
- Lloyds suggests "material" extra provisions may be needed
- London IPO scene seeing shift in sentiment
5.05pm: FTSE pulls back
The FTSE 100 shed 39 points to close at 9,509.
As gold pulled back, silver surged to a new high.
“Silver has managed to renew its membership in the all-time high club, finally joining gold after its surge today that took it through the peaks seen in the mad rally of 2011,” IG chief market analyst Chris Beauchamp said.
“If gold has turned into a momentum trade, then silver’s has been another beneficiary, with the added spice of less liquidity helping to drive more dramatic moves. ‘Debasement’ might be the word of the week, but in reality this is a reflection of how investors are keen to ride any trend right now.”
3.52pm: HSBC 'torches' £9bn of value
HSBC has just torched nearly £9 billion of its own market value in a single day... and for what? To buy out the remaining 37% of Hang Seng Bank at a price many analysts think looks overgenerous. The £10 billion deal, announced earlier on Thursday, will be funded by suspending three-quarters of planned share buybacks, a move that’s gone down like a lead balloon with investors.
At HK$155 a share, HSBC is paying roughly 15 times forecast earnings for a business it already controls... and that’s before factoring in Hang Seng’s exposure to China’s property mess.
The number crunchers at Keefe, Bruyette & Woods said they “struggle to see” the logic of spending a year’s worth of buybacks on a purchase with “no obvious synergies”. Buying its own stock at nine times earnings, they note, would have made far more sense.
Shore Capital went further, hinting the deal might be politically driven, given that many minority shareholders are Hong Kong and Chinese investors. Whatever the motive, this looks like a costly detour from HSBC’s otherwise disciplined restructuring. Investors were right to reach for the sell button.
3.10pm: Wall Street takes breather
US stocks edged lower at the open as investors digested the first few earnings reports from the September quarter.
The Dow Jones pulled back 0.3% to 46,485 points, the Nasdaq was down 0.2% at 22,993 points, and the S&P 500 was down 0.2% at 6,742 points.
Gold’s record-setting run also came to an end, with the yellow metal pulling back about 0.7% to trade at about $4,043 per ounce.
Turning to earnings, Delta outperformed expectations and issued strong guidance for the fourth quarter, sending its shares almost 7% higher in early trade.
PepsiCo also topped estimates on international sales growth, despite posting another quarter of declining volume in North America.
2.11pm: HSBC deal is illogical, captain
Like Mr Spock on the Starship Enterprise, analysts are questioning the logic of those in control of HSBC (LSE:HSBA) and their Hang Seng deal.
Paying HK$155 a share equates to around 15 times forecast earnings, according to analyst Edward Firth at Keefe, Bruyette & Woods, or 1.8 times tangible book value.
The transaction is expected to reduce CET1 by 1.25%, reflecting the cash consideration less 0.40% for the removal of non-controlling regulatory capital deductions from surplus capital in Hang Seng.
"This equates to a net CET1 capital cost of $11 billion, equating to one year of share buybacks."
Firth says he and his colleagues "struggle to see" how buying out minority shares for at least 15 times earnings with "no obvious synergies" is positive in comparison to buying back its own shares at just over nine times earnings, with a positive earnings contribution of circa 4%.
"We therefore question the logic of this transaction."
Gary Greenwood at Shore Capital said he thinks that "this could possibly be a politically-motivated transaction, as much as a financially-motivated one", as most of the minority stake is held by Hong Kong and Chinese retail investors.
HSBC already had control of the business, "so this is not about driving out synergies and savings", the Shore Cap analysts said.
1.41pm: Another example of AI doing what humans do well enough on their own?
To analyse changes in tone of central banks, UBS has turned to artificial intelligence.
In a note entitled 'Deep Speak', the bank’s strategists have built an AI model that analyses shifting subtleties in language from the world’s most powerful central bankers.
The results suggest a quiet but notable turn in the global monetary mood...read more here.
To be honest, for me, like much of AI, this feels like is something that humans were doing well enough on their own before the rise LLMs and chatbots, who just do it faster and using more energy and resources, while putting humans out of jobs.
12.59pm: Dollar, Fed etc
The US dollar has remained firmer today, inching towards 99.0 and its highest level since 1 August.
"It looks as if the dollar is now pausing for breath," says market analyst David Morrison at Trade Nation, which he feels is unsurprising given this week’s rally that has tacked on around 1.5% from Friday’s close and around 3% since hitting a multi-year low in mid-September.
"It does feel as if speculation over the dollar’s demise as the world’s reserve currency have been overdone.
"It may have had a dismal nine months or so, but it is starting to look a bit brighter."
On US stocks, Morrison he says last night's minutes from the Federal Reserve’s September FOMC meeting, which was notable for being the first attended by Stephen Miran, President Trump’s preferred choice as a new governor.
"The minutes also revealed another clear division among policymakers, who were narrowly split between one or two more 25 basis point cuts before year-end," says Morrison.
"It was also clear that all FOMC members were concerned about recent weakness across the labour market, even as they also expressed worries that inflation was still too high."
Despite the lack of new economic data clarity, expectations of two further rates cuts this year have risen, per the CME’s FedWatch Tool, which Morrison says has helped to underpin US equities.
There are no major US data releases scheduled today, due to the ongoing government shutdown, which means attention today is likely to turn to remarks from Fed chair Jerome Powell at a community bank conference, followed more Fedspeak from Michelle Bowman and Mary Daly later in the day.
US earnings include Delta Air Lines and PepsiCo.
12.23pm: Anglo's kitchen sink
With Anglo American one of the top Footsie risers today and over the past week and month, analysts at Berenberg have been digging into the deal with Teck Resources after this week's operational update.
The update was a laundry list of production snags and lowered expectations, but that may actually work in Anglo’s favour, Berenberg suggested.
It had upgraded the FTSE 100 miner to 'buy 'just a day before the update, reckons the gloomy tone from Teck has effectively “kitchen-sinked” its outlook, with Anglo also providing reassurance that it has dealt with similar issues in its own mines.
12.08pm: Mixed picture across markets
The FTSE remains underwater at midday but is swimming back towards the surface, cutting its loss from 46 points to under 20.
It's a mixed picture around Europe still, with the German DAX and French CAC moving higher, while UK, Italian and Spanish benchmarks continue to gasp.
US futures are mixed too, but futures are not giving much away apart from uncertainty.
S&P 500 and Nasdaq futures are down but less than 0.1%, while those for the Dow Jones are just above flat.
11am: Two defence collabs signed with India
The UK has signed £600 million of defence deals with India, including to supply lightweight missiles to the Indian Army, part of Keir Starmer's trade mission to the subcontinent.
While they will be built in Belfast, the missiles are to be made by French group Thales and co-produced with India's Bharat Dynamics.
"The deal paves the way for a broader complex weapons partnership between the UK and India, currently under negotiation between the two governments," the UK government said in a statement.
10.16am: BoE's Mann talks inflation
Bank of England policymaker Catherine Mann is speaking at an event today, with comments on inflation that might be of interest.
"It is perhaps counterintuitive that in order to create an environment conducive to growth, monetary policy must remain restrictive for longer," says Mann, who voted against rate cuts in the most recent meetings.
"But this is necessary to bring inflation sustainably back to our 2% target in the medium term."
Citing her former boss, Federal Reserve chair Alan Greenspan, she says price stability occurred when households and businesses were not factoring expected price changes into their decisions.
"The evidence from consumer behaviour is that we are not there yet," she said.
Mann said last week at another event that she thought Britain's inflation rate had become persistently high, though she said further interest rate cuts were not off the table.
9.51am: Lloyds shareholder distributions shouldn't be disrupted
On the Lloyds update today, analyst Tomasz Noetzel at Bloomberg Intelligence says the additional 'material' motor-finance provisions "is a surprise".
He noted that the FCA's £8.2 billion sector-redress estimate yesterday, £11 billion including costs, was below its prior £9-18 billion range.
This led to the City analyst consensus revising down remediation estimates by almost 60% from the Supreme Court's August ruling, he added.
"The upper-end scenario for Lloyd's additional provision was £850 million for 2025, on top of £1.2 billion already booked, now appears the most likely. Even at that level, the charge shouldn't disrupt shareholder-distribution plans."
9.38am: Later pub opening hours
The government has announced a fast-track review of licensing laws to support pubs and bars.
Last orders could come later for drinkers in England and Wales under what the government calls "outdated" licensing laws.
The plan aims to make it easier for pubs and bars to serve food outdoors and host live music, part of a push to cut red tape and lift the struggling hospitality sector.
George Holmes, managing director of Aurora Capital, said it is "a step in the right direction" and could help more venues stay open and attract customers.
"But longer hours won’t solve deeper problems. Pubs are still struggling with high energy costs, rising wages, and unfair business rates.
"The real measure of success will be whether these changes make life easier for smaller independent venues, and not just big chains with the time and money to navigate the system."
He suggested the government should also streamline licensing processes and provide fair funding for local authorities to handle applications.
9.14am: Lloyds overhang, HSBC investors don't like look of Hang Seng deal
Across mainland Europe, things are mixed, with the FTSE 100 down almost 0.4% after just over an hour of trading, contrasting with small gains in Frankfurt and Paris, while Madrid and Milan are also modestly in red.
HSBC, Lloyds and a group of ex-divs are all weighing on the London index.
Lloyds had already set aside £1.15 billion as it was a significant player in the motor finance mis-selling scandal alongside other lenders like Santander, Barclays and Close Brothers, says Victoria Scholar, head of investment at Interactive Investor.
Today's share price loss wipes out the gains from yesterday, when Lloyds rose on the publication of the FCA's consultation paper.
"Today’s update from Lloyds raises concerns that the lender is still likely to suffer a significant financial hit with some analysts pencilling in a 30% higher figure at around £1.5 billion," said Scholar.
"Developments from the mis-selling scandal will continue to be an overhang for the bank and other implicated lenders in the sector.
"The next catalyst for the stock could be in a fortnight when Lloyds is likely to provide more information and clarity as part of the release of its third quarter results."
On HSBC, where the bank is proposing to pay $13.63 billion to buy out the 36.5% of shares it doesn't already own in Hong Kong’s Hang Seng Bank, a 30% premium to the last closing price, at a cost of no share buybacks for the next three quarters.
"Share buybacks have been a big part of investors’ rationale behind holding shares in HSBC after the bank paid out $11 billion to shareholders last year," says Scholar.
There might be other factors that worry shareholders, as Scholar notes that Hang Seng has been caught up in China’s property crisis, pushing up its bad debts, while HSBC has been carrying out a major global restructuring, cutting costs, pulling away from investment banking, exiting certain markets and focusing more on wealth management and on Hong Kong.
8.53am: IPO scene 'seeing shift in sentiment'
London is "starting to see a shift in sentiment" in the IPO scene, according to a new report from EY-Parthenon, as many investors will have noticed, with several announcements in recent weeks.
Three companies floated on AIM, the London Stock Exchange’s junior market, during the third quarter of 2025, raising a combined £16.3 million, according to the report, bringing total London listings for the year to 12, generating nearly £200 million, a 66% fall in proceeds compared with the same period last year.
EY says momentum is beginning to build, with several IPOs having been confirmed for the coming months (see Shawbrook, Princes and Ebury).
And the fourth quarter has already seen one new float, with Beauty Tech Group arriving last Friday with a £106 million fundraising and a debut valuation of £300 million.
"The UK IPO market has largely remained in ‘wait and see’ mode,” said Scott McCubbin, EY-Parthenon’s UKI IPO leader.
"However, we are starting to see a shift in sentiment... prospective companies are keen to move when the pricing window opens."
8.26am: FTSE risers
At the other end of the Footsie scale are a pack of miners, led by Anglo American PLC (LSE:AAL), up 3% this morning (and over 6% over the past week and almost 20% over the past month).
Antofagasta PLC (LSE:ANTO) and Rio Tinto Ltd (LSE:RIO, ASX:RIO, OTC:RTNTF) are next, up 2.9% and 2.3% respectively, with Glencore PLC (LSE:GLEN) lagging at 1.3%.
Copper looks like the catalyst for these gains, with prices up 2.4% to $5.129/lb.
Citi yesterday upped its forecasts for the orange metal, saying the copper market is starting to look beyond short-term demand worries and towards a tighter supply picture.
Ladbrokes owner Entain PLC (LSE:ENT), up 2.5%, and British Airways owner IAG (LSE:IAG), up 1.9%, are in the chasing pack, followed by Burberry, Polar Capital Technology Trust, Mondi and Ashtead.
8.15am: FTSE drops as HSBC and Lloyds slide
The FTSE 100 has beat a small retreat in initial trades, down 20 points at 9,529, with declines at HSBC and Lloyds propelling the move.
HSBC has dropped 6.6% as investors do not seem to like the idea of going without their share buybacks for three quarters in order to take full ownership of the storied Hong Kong lender, in which the Anglo-Asian bank has owned a stake since 1965.
Lloyds is down 3.5% after it warned that it might need to put aside more money than it has already done to pay its share of the motor finance compensation scheme.
Other fallers include Barratt Redrow PLC (LSE:BTRW), Tesco PLC (LSE:TSCO), WPP PLC (LSE:WPP) and Kingfisher PLC (LSE:KGF), with all four's shares going ex-dividend today.
7.59am: Mobico's Spanish wing wins Saudi contract
National Express owner Mobico Group PLC (LSE:MCG) has won an eight-year capital-light contract in Saudi Arabia as part of a joint venture.
Its Spanish subsidiary, ALSA, will share in the total contract value of €500 million in revenue with a local Saudi partner.
The contract is to run 156 vehicles connecting Riyadh with the new city of Qiddiya, via park & ride facilities and shuttle services.
7.48am: HSBC to take full ownership of Hang Seng Bank
HSBC Holdings PLC (LSE:HSBA) has proposed to acquire the rest of Hong Kong-listed Hang Seng Bank that it does not already own.
Under the proposal, Hang Seng will be taken under the wing of the FTSE 100 group's HSBC Asia Pacific subsidiary, which currently owns a 63.34% stake, via a scheme of arrangement.
The deal is expected to be earnings accretive for HSBC, although it will have an estimated day-one CET1 capital impact of 125 basis points, which it envisions being restored by pausing share buybacks for three quarters.
7.31am: Lloyds baffled by FCA motor finance 'uncertainties'
More on the Lloyds statement, where the UK's largest lender says it is continuing to calculate the likely impact of yesterday's FCA consultation paper.
"Uncertainties remain outstanding on the interpretation and implementation of the proposals," the bank said, but its initial analysis of the proposed scheme suggests "an additional provision is likely to be required which may be material".
However, it cautioned again that it is continuing to analyse and review the proposals, and presumably liaise with the FCA too.
It promised further updates when it knows more or has crunched some more numbers.
7.15am: FTSE tipped to slide, despite Wall St and Asia gains
The FTSE 100 has been called lower on Thursday, with a retreat expected after the index powered to another new high yesterday.
Futures for the London benchmark are pointing to a loss of 24 points, after the previous day's 65.29 gain to close at 9,548.87, up over 2% since the start of the month.
A decline for Lloyds Banking Group PLC (LSE:LLOY) might be on the cards as the lender said an "additional provision is likely to be required which may be material" for motor finance compensation.
Overnight, the Wall Street session was mixed, with the Nasdaq jumping 1.1% to another all-time high, and the S&P 500 rising 0.6% to a new record of its own, while the Dow Jones finished down one point.
The likes of Nvidia, Broadcom, Tesla, Oracle and Netflix drove gains, while the Dow was held back by falls for Goldman Sachs, IBM, Merck & Co, American Express and Procter & Gamble.
Asian markets are higher this morning, with Japan's Nikkei surging 1.7% to its own new peak.