- FTSE rises 13 points to 9,714
- European stocks markets down sharply
- Chancellor Reeves delivers Budget 'scene setting' speech
- ABF says Primark could be split from Food businesses
4.58pm: FTSE little changed
The FTSE 100 edged higher to finish Tuesday’s trading session up 13 points at 9,714 as Wall Street CEOs warned of a major stock market correction.
“Global stock indices pulled back from their recent record highs as the last few days' AI-driven rally ran out of steam and investors cashed in profits amid comments from several Wall Street chief executives warning of a correction,” IG senior technical analyst Axel Rudolph said.
“In the UK, sterling slid to a six-month low and the FTSE 100 initially dipped by 0.7% before recovering and trading flat on the day following the UK chancellor Rachel Reeves’ comments signalling a likely tax rise and reaffirmed commitment to fiscal discipline."
4.01pm: FTSE fightback
The FTSE 100 has fought back to positive territory, having been down over 125 points or 1.3% mid-morning.
Defensives are leading the way, chiefly drugmakers, utilities and tobacco companies, including GSK, AstraZeneca, BAT, United Utilities and Smith & Nephew all up over 1%.
The pound is down 0.7% versus the dollar, its lowest since 11 April.
Miners and retailers continue to be in deepest water, led by JD Sports Fashion, down 7.3%, and Antofagasta, down 3.3%.
Burberry, Endeavour Mining, Fresnillo, abd Anglo American are all down between 2% and 3.1%
Associated British Foods is also down, despite a warm reception from analysts for the mooted separation of Primark from its Food business.
3.24pm: Economist in support of Reeves speech
Berenberg economist Andrew Wishart is encouraged with what he calls Rachel Reeves’ "commitment to inflation and public debt reduction at the expense of the Labour party’s manifesto commitment to not raise certain taxes".
This, in line with comments earlier from Michael Brown, "as good as abandoned" the Labour party’s manifesto commitment not to raise any of the main taxes on income and consumption.
He says the suggested "major tightening of fiscal policy" at the budget announcement later this month "could create a virtuous feedback loop to lower interest rates and public borrowing, even if it is delivered by tax hikes rather than spending cuts".
As Reeves has made cutting the national debt one of the guiding principles of the budget, she has "hinted that she would tighten fiscal policy more aggressively than markets anticipated so far".
Although the Chancellor mentioned welfare reform and public sector productivity, she prioritised health and defence spending, which suggests to Wishart that "spending cuts will make a marginal contribution to the tightening of fiscal policy in the 26 November budget at best".
Wishart sees a broad-based tax hike at the budget, which he sees as "far less damaging to economic incentives than the hodgepodge of measures that would be necessary to raise large amounts from high-income and wealthy individuals".
He says his best guess is that the government will use that reassessment as political cover for a 2p per pound increase in all three rates of income tax, raising over £20 billion.
2.58am: Wall Street sellers out in force
US markets opened sharply lower, but losses are being pared.
The Dow Jones is down 0.45%, the S&P 500 has fallen 0.70% and the Nasdaq slumped 0.91%, while the small cap Russell 2000 is worst hit, down 1.31%.
Notable Nasdaq fallers include Palantir, down almost 9%.
A fall in bitcoin has hit crypto treasury companies, with Strategy down 4.3%.
Chipmakers are down too, including Micron Technology, Intel Corp, AMD and ARM.
1.52pm: Wall Street about-turn expected
Wall Street tech stocks are likely to make an about-turn on Tuesday, with some analysts talking about an abrupt shift in the market mood.
Futures for the Dow Jones were down 0.6%, while those for the S&P 500 were down 1% and the Nasdaq 100 was called 1.3% lower.
For the Dow, this will extend a decline from the day before, when it fell 0.48%, while reversing gains of 0.17% for the S&P 0.17% and 0.46% for the tech-heavy Nasdaq.
Market analytst Kenny Polcari at Slatestone said: "It looks like the tone has changed from yesterday to today – expect the algo’s to create more chaos – it’s always worse on the way down because buyers will step aside to see just how anxious the sellers get."
He said he suspected the S&P "might test 6775 ish – down about 1.1%.
"And if that fails to hold then the trendline would be the next logical stop, and that is at 6647, down 3% from here. Something that is not out of the question – if they get themselves all worked up. I don’t think it happens today – but I am not ruling it out over the next couple of days.
"Once they focus on a negative headline – then they only focus on the negative headlines (until they don’t)."
More media spotlight will be on US politics today, with the New York City mayoral election, as well as gubernatorial races in New Jersey and Virginia.
Today's earnings include AMD, Shopify, Uber, Arista Networks, Amgen, Pfizer and Spotify.
12.50pm: Bond markets like sound of 'much more' fiscal tightening
UK bonds are settling in at the lowest levels this year and the pound fell to its lowest since April after Rachel Reeves flagged that she may not only use the Budget later this month to create more fiscal headroom for the government.
The Chancellor's early morning "scene-setter" speech was derided the speech as "waffle" by Kemi Badenoch, possibly because it laid much of the blame for the country's current economic predicament at the door of the previous Tory governments.
But it was fair to say there were few precise conclusions that could be nailed down at first listen.
However, reading between the lines was possible for investors, market analysts and economists.
Michael Brown, senior research strategist at brokerage Pepperstone, said there were three principal takeaways from the speech.
"The Chancellor all-but-confirmed that the OBR will be downgrading its trend productivity growth forecasts; Reeves noted that she is seeking a greater degree of fiscal headroom (>£9.9bln that was left in the spring) to protect against future shocks; Reeves refused to repeat the manifesto promises not to raise income tax, national insurance, or VAT."
Combining the three means fiscal tightening is likely to be "much, much more" than was previously expected to address a hole in the public finances of around £35 billion.
11.52am: Small cap movers: Zotefoams, Genedrive, Kore
Some small cap movers this morning.
Zotefoams dropped 13% after the company cautioned that trading conditions remain “mixed,” prompting investors to lock in gains following a 58% rise over the past six months. (Read more...)
Genedrive shares extended their recent gains, rising 3% today and up around 300% over the past month, after the company announced its genetic test for antibiotic-induced hearing loss has been adopted by Dublin’s Rotunda Hospital. (Read more...)
Hydrogen Utopia International climbed 9% after it was granted an Investment Registration Certificate by Saudi Arabia’s Ministry of Investment (MISA), giving it full legal status to operate in the kingdom. (Read more...)
Kore Potash rose 11% after confirming it has begun a formal sale process while continuing to explore funding options for its flagship Kola potash project in the Republic of Congo. (Read more...)
Ferro-Alloy Resources strengthened 13% after the company unveiled major cost savings and a financing breakthrough for its flagship Balasausqandiq vanadium project in southern Kazakhstan. (Read more...)
11.20am: Dr Copper speaks?
More details on why the heavyweight miners are down.
Anglo American shares are bottom of the FTSE now, down 3.4%, followed by Antofagasta at -3.1%, two of the more copper-focused miners, then Glencore down 2.4% and Rio Tinto down 1.9%.
Copper fell 2% this morning on the LME, down nearly $600 from recent record highs.
Mining analyst John Meyer at SP Angel says this reflected a China capacity cut and supply boost from Chile's national mining company Codelco.
"The move follows a wider sell-off in base metals, with aluminium and tin also sliding," he said, after the metals spectrum enjoyed a strong rally through the third quarter on the back of a weaker dollar, increased Federal Reserve rate cut expectations and steady China demand.
"However, calls for capacity cuts from China’s major non-ferrous metals body has raised concerns."
10.51am: Budget can't come soon enough
Giving a big speech ahead of the Budget was an "unusual" idea for Rachel Reeves and it has "left investors with more questions than answers, and done nothing to remove uncertainty around taxes," says Dan Coatsworth, head of markets at AJ Bell.
From a markets perspective, gilt yields are settling lower than they closed overnight, which signals the bond market is ok with what Reeves said.
The pound has dropped 0.5% against the dollar and 0.4% versus the euro.
Says Coatsworth: "The bond market would be happy if the chancellor raises taxes as it would help to improve public finances and make the UK less risky from an investment perspective."
He says it was "telling" that the 10-year gilt yield fell as Reeves began her speech, "indicating that bond investors thought we’d get confirmation that taxes would go up at the Budget. But as it became clear that Reeves was merely dancing around the topic, yields went back up."
The Chancellor said the speech was about giving context to the challenges facing the government, but batted away questions about taxes, as she did not want to go into detail yet.
While Coatsworth and many others want the Budget to come now, this week brings a Bank of England meeting
10.03am: Pound down after Reeves speech
The pound is falling after the Reeves speech, down over 0.5% against the dollar at 1.3063,
Keir Starmer apparently laid the groundwork for an income tax hike with his MPs yesterday and his Chancellor delivered a surprise speech today to set the scene that will guide her Budget on 26 November.
"Reeves is caught between various stools," says market analyst Neil Wilson at Saxo, "the country (manifesto pledges), the party (spend more, protect the NHS), and the markets (gilts selling off just narrows the headroom).
"So, it’s a very tricky line to walk but ultimately, it’s the lack of political leadership from the top that is the making of this situation.
"However, a bold tax hike should lower gilt yields and could allow the BoE to go further with cuts.
"This will be a contractionary fiscal blow to the economy. But the bet is that you get the market onside, generate confidence from certainty, which gives you more flexibility later.
"The risk is that you deal a big blow to confidence in the real economy and hit growth, which makes it all for nought. Either way, fiscal tighter, monetary looser suggests sterling remains on back foot."
9.28am: Shift in the market mood
The FTSE is continuing to slide lower, now down over 1%, with all but nine of the index constituents in the red.
The biggest faller is Beazley, down 3%, followed by Anglo American, JD Sports Fashion, Antofagasta and Burberry.
So a mix of insurers, miners and retailers.
Primark owner AB Foods is down 2.3% after its results, even though the likes of Barclays was very pleased with the news of a structural review.
On mainland Europe it's a similar story, with the DAX down 1.6% in Frankfurt, and the CAC down 1.4% in Paris, while the Eurostoxx 600 is down 1.3%.
The market mood has shifted, says analyst Kathleen Brooks at XTB, also pointing to S&P 500 futures at their lows of the morning so far, down 1.1%.
"There is no single driver for this shift in market sentiment," Brooks adds, with Palantir’s results stronger than expected but focus coming onto a a 12-month forward PE ratio of 240 times future earnings, meaning investors are "getting skeptical about how far this stock can rise".
"We mentioned on Monday that although Palantir was a poster boy for the AI trade, a positive reaction was likely for the AI stock market rally to continue."
Palantir’s stock price fell 7% in after-hours trading.
"If this indicates a pause in the AI trade then we could see a broad-based sell off, especially since the US indices have been led higher by a small number of big tech names in recent weeks."
Brooks says Wall Street CEOs have also "put investors on notice for a correction in the next 1-2 years", with the boss of Goldman Sachs saying that tech stock valuations are "full", and his counterpart at Citadel also warning that stock markets are irrational at the highs of bull markets.
"With the S&P 500 trading at a price to earnings multiple above its 5-year average, it is no wonder that the wisest on Wall Street are concerned about the future.
"It seems like the investment community has taken heed of this message," says Brooks.
The risers on the FTSE are mostly utilities and other 'defensive' stocks, including tobacco and drinks companies.
"Even the usual safe havens are failing to take off this morning," says Brooks, with the gold price is back below $4,000 per ounce.
"This could be a sign that the gold price may sell off alongside equities during a period of risk aversion after the strong run up in the yellow metal since the summer."
Oil is also tumbling, with Brent down 1.4%.
9.17am: How much would an income tax rise cost and raise?
The fact that Rachel Reeves had to make what is being seen as an unprecedented pre-Budget speech at all, says Sarah Coles, head of personal finance at Hargreaves Lansdown, is "likely to demonstrate that the government wants to highlight its position: to meet its fiscal rules, it’s likely to have to make spending cuts and raise significantly more tax".
"The scale of the financial challenges for the government right now mean the Budget is likely to involve some incredibly tough decisions."
She notes that when Budgets are delivered, the main attention is always on the tax and spending decisions rather than the reasons for them, "so drawing attention to the challenges early gives them space".
The speech will inevitably mean that people will worry about the tax and spending decisions that are on the way, though media speculatioin was already rife.
"It is going to raise concerns that it could mean the government is laying the ground to make a big change, which could even run contrary to manifesto pledges. This could mean one of the big three: income tax, National Insurance or VAT," says Coles.
Given that Reeves has focused on avoiding inflationary choices, that rules out VAT, Coles says this puts income tax "front and centre".
The costs of a rise in basic rate income tax vary with earnings, so a 1p rise (one percentage point) would add £224 to the tax bill of someone earning £35,000 each year or for someone earning £55,000 to £75,000, it would cost an extra £377.
HMRC estimates show that each 1p rise in the basic rate of income tax raises about £5.5–6 billion a year, though this figure can vary slightly year to year.
A rise that only affected higher and additional rate taxpayers "might be easier politically," says Coles, "as by falling only on higher earners the government could make the case that the average earner wouldn’t be affected."
So for those earning £35,000 a year, an extra 1p on higher rate tax would see no extra cost, but for someone who earned £55,000, it would cost you an extra £47 a year and if you earned £75,000, it would cost you an extra £247.
9.01am: Ripping off the bandage
On the Chancellor's speech, Maike Currie, VP of personal finance at PensionBee, says: "Rachel Reeves is ripping off the band-aid - albeit slowly and deliberately.
"By signalling her intent ahead of time, she’s preparing the ground for tough but necessary fiscal choices. This approach sets the stage for what could be one of the most consequential Budgets in recent memory."
8.49am: Reeves sets scene for tough Budget choices
Bond markets are watching closely as Chancellor Rachel Reeves is now taking questions are delivering a speech this morning, setting the scene for the 26 November Budget, widely seen as laying the groundwork for potentially painful but necessary income tax increases.
She said the budget would focus on bringing down NHS waiting lists, the cost of living, and the national debt.
Reeves cited weak productivity and high government debt as key challenges, blaming previous governments' "years of economic mismanagement [that] has limited our country’s potential".
She reaffirmed her commitment to fiscal rules and prioritising debt interest savings for public services, reassuring words for bond markets and voters.
"The less we spend on debt interest," she said, "the more we can spend on the priorities of working people, NHS, our schools, our national security, the public service essential to both a decent society and a stronger economy."
Bond yields fell initially, reflecting confidence in fiscal discipline and possible future rate cuts, but the next hour or two will confirm what they really think.
Market analyst Patrick Munnelly at Tickmill Partners says: "Much of what Reeves might unveil today regarding fiscal consolidation may already be baked into market sentiment."
8.28am: First views on ABF strategic review
Barclays analyst Warren Ackerman says: "We are fans of pure plays and have advocated for a split but didn't think it was a realistic possibility, so this is a positive surprise".
He feels Primark is now of a size that "it make sense", with the Foods business looking undervalued within the ABF structure.
"There are hurdles ahead such as tax but this is a big first step."
He gives his share price target a big hike to 2500p from 2150p.
The overall performance from AB Foods was "disappointing", says market analyst Richard Hunter at Interactive Investor, but this had previously been foreshadowed, while the strategic review was only rumoured and was the "headline news".
Hunter feels the rationale for such a move "is that management consider that the Food business has long been misunderstood by the market, despite its portfolio, expertise and potential".
"In addition, Primark is reaching a size where it perhaps requires laser focus to capitalise on its own growth prospects, particularly overseas, where the brand is gaining some real traction.
"The consideration of the split is understandable, with Primark being a jewel in the crown for the group and currently responsible for 49% of group revenues.
"That being said, this has been a challenging time for the retail business and the numbers are mixed."
8.15am: FTSE tumbles due to miner decline
The FTSE 100 has tumbled out of bed, plunging 74 points or 0.8% to just above 9,627 as miners create a heavy weight.
A fall in copper and iron ore prices are hitting base metals miners, with Antofagasta and Anglo American down 3.6% and 2.5% respectively.
Precious metals miners Fresnillo and Endeavour Mining are both down over 2% as gold and silver prices drop.
Schroders and Vodafone are also down over 2%.
8am: ABF says Primark and food businesses could be separated
Associated British Foods PLC (LSE:ABF) says it is carrying out a structural review that could result in Primark being separated from its food businesses.
Alongside final results from the FTSE 100 group, where profits fell less than feared, chairman Michael McLintock said he is leading the review, which is in consultation with Wittington, the investment vehicle of the founding Weston family.
"Given the scale that Primark has now attained and the need for better understanding of our Food businesses, the board has been undertaking an in-depth review of the future shape of ABF to assess whether a separation of the Primark and Food businesses would be a better structure in the years ahead."
ABF reported full-year profits that fell 13% to £1.73 billion, beating consensus estimates of £1.68 billion, while adjusted earnings per share were 174.9p, also beating forecasts.
A £250 million share buyback was announced and the total dividend was 63p, down from 90p a year ago.
7.40am: A BP beat
BP PLC (LSE:BP.) has posted third-quarter profits broadly slightly ahead of consensus forecasts, with a new $750 million share buyback announced on top.
Underlying replacement cost profit came in at $2.2 billion, beating analyst estimates of $1.98 billion, while adjusted earnings per share of 14.24 cents were well ahead of the expected 11.97 cents.
CEO Murray Auchincloss hailed successes in the development and exploration of new projects, with all six of the major oil and gas projects planned for the year now online, with four ahead of schedule and a seventh sanctioned in the Gulf of Mexico/America.
Meanwhile, he said divestment proceeds for the year should be higher than $4 billion, underpinned by around $5 billion of completed or announced disposal agreements and "good progress" is being made to cut costs, strengthen our balance sheet and increase cash flow and returns.
7.24am: Market divergence between big tech and the rest
An increasingly familiar theme was seen on Wall Street last night: a divergence between Big Tech and the rest of the market.
While the S&P 500 rose 0.17%, this was largely down to the Magnificent 7 tech giants, which were up 1.18%, while the S&P 500 excluding the Mag-7 fell 0.3% and the equal-weighted S&P 500 also fell 0.3%.
"The main driver was yet another AI deal, this time Amazon’s with OpenAI," says Jim Reid, macro strategist at Deutsche Bank, who noted that investors also weighed up weak data, hawkish Fedspeak, and a government shutdown that’s now the joint-longest in history and from midnight tonight will be the longest ever.
Reid says even more media spotlight will be on US politics today, with the New York City mayoral election, as well as gubernatorial races in New Jersey and Virginia.
"Overnight we are seeing a bit more negativity take over after Palantir fell more than -4% after hours," Reid says. "Their results were good but markets were disappointed at the lack of company visibility for the whole of 2026."
The company has the highest price-to-sales ratio in the S&P 500 at 85, he adds, with the stock up more than 150% this year, while the index average is a price-to-sales ratio of around 3.5.
Nasdaq futures are down 0.85% this morning and S&P futures down 0.59%. .
7.16am: FTSE 100 and other European markets called lower
The FTSE 100 has been called sharply lower on Tuesday, as have other European stock indices, though things could turn around with positive quarterly results from BP and Primark owner AB Foods.
A fall of roughly 40 points is the shout from the futures market, after the London benchmark got November off to a faltering start by falling 15.88 points or 0.16% to 9,701.37.
This was against a mixed wider market background at the start of the week, both in Europe and the US, where the Dow Jones also fell 0.5% overnight, but the broader S&P 500 rose 0.17% and the tech-heavy Nasdaq climbed 0.46%.
Asian markets are all in red this morning, led by a 1.7% fall for Japan's Nikkei and 0.7% for Hong Kong's Hang Seng.