4th Nov 2025 16:59
(Alliance News) - The FTSE 100 outperformed European and US peers on Tuesday, but sterling fell further, as Chancellor Rachel Reeves laid the groundwork for further tax rises in this month’s budget.
The FTSE 100 index closed up 13.59 points, 0.1%, at 9,714.96. It had earlier traded as low as 9,574.15.
The FTSE 250 ended 113.41 points lower, 0.5%, at 21,995.48, and the AIM All-Share declined 12.47 points, 1.6%, at 759.55.
The Cboe UK 100 was up 0.1% at 968.61, the Cboe UK 250 was 0.7% lower at 19,049.55, and the Cboe Small Companies fell 0.9% at 17,800.08.
In London, Chancellor Rachel Reeves put the country on notice that tax rises are coming in her Budget, saying "each of us must do our bit".
Reeves declined to recommit to Labour's manifesto commitments not to raise income tax, national insurance or VAT, saying "we will all have to contribute".
She blamed global problems, including the tariff war triggered by US President Donald Trump, and domestic issues, including the budget watchdog's expected downgrade of economic productivity, for the "hard choices" she will make.
Reeves took the unusual step of delivering a speech three weeks ahead of her Budget to prepare the ground for the expected tax increases she will announce.
Speaking in Downing Street, she said: "As I take my decisions on both tax and spend, I will do what is necessary to protect families from high inflation and interest rates, to protect our public services from a return to austerity and to ensure that the economy that we hand down to future generations is secure with debt under control.
"If we are to build the future of Britain together, we will all have to contribute to that effort.
"Each of us must do our bit for the security of our country and the brightness of its future."
The Office for Budget Responsibility is expected to heavily downgrade its previous forecasts for productivity, adding to the chancellor's headaches.
Sterling eased after Reeves spoke, while bond yields edged downwards.
The yield on the UK 10-year gilt stood at 4.42%, down from 4.44% on Monday.
The pound was quoted at USD1.3045 at the time of the London equities close on Tuesday, lower compared to USD1.3146 on Monday.
The euro stood at USD1.1494, down against USD1.1531. Against the yen, the dollar was trading lower at JPY153.41, compared to JPY154.14.
In European equities on Tuesday, the CAC 40 in Paris closed down 0.6%, while the DAX 40 in Frankfurt ended 0.8% lower.
Stocks in New York were lower at around the time of the London close. The Dow Jones Industrial Average was down 0.3%, the S&P 500 index was 0.7% lower, and the Nasdaq Composite declined 1.2%.
The yield on the US 10-year Treasury was at 4.10%, trimmed from 4.12% on Monday. The yield on the US 30-year Treasury was quoted at 4.67%, narrowed from 4.70%.
The falls on Wall Street came as two banking bosses said a pull-back in equities would not necessarily be a bad thing.
Morgan Stanley Chief Executive Ted Pick said "we should also welcome the possibility that there would be 10% to 15% drawdowns that are not driven by some sort of macro-cliff effect," saying this would be a "healthy development" in a market where stock valuations are so high.
While his counterpart at Goldman Sachs David Solomon said this kind of pullback often happens in positive market cycles without completely upending the narrative.
"It just means things run and then they pull back so people can reassess," Solomon said.
Back in London, gains in index heavyweights pharmaceuticals stocks GSK, up 1.9%, and AstraZeneca, up 1.3%, helped the bue-chip rally from a downbeat start.
BP was another index top name in the green, up 1.3%, as the oil major beat analysts' forecasts with its third quarter results and announced a new share buyback.
London-based BP reported underlying replacement cost profit of USD2.21 billion in the third quarter, down 2.6% from USD2.27 billion a year ago, but ahead of USD2.02 billion company compiled consensus.
In addition, it announced a GBP750 million share buyback and increased the dividend to 8.32 US cents from 8.00 cents a year ago.
AJ Bell analyst Russ Mould said: "The company is not getting a huge amount of help from oil or gas prices, so BP's management will be pleased to deliver a set of third-quarter results that beats analysts' forecasts and outlines another year-on-year increase in the dividend as well as a new share buyback."
AB Foods fell 3.0% as it said it was considering plans to split its Retail and Food businesses.
London-based ABF consists of fast fashion business, Primark, and a number of businesses in its Food division - Grocery, Agriculture, Sugar and Ingredients.
It owns food brands such as Twinings tea, Kingsmill bakery, Jordans cereals and Mazola cooking oils.
Analysts at Barclays said: "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."
AB Foods Chief Executive George Weston said the firm's "unique and exceptional" Food business has historically been less well understood by the financial markets than Primark, yet it has a "highly attractive portfolio, deep global expertise and much potential."
Betting firms, seen as a probable target for the Chancellor in November's budget, fell back.
William Hill owner, Evoke, tumbled 4.0%, while Ladbrokes owner Entain was down 3.5%.
Flutter Entertainment, which owns Paddy Power and Betfair, fell 3.9%, with the added negative of a downgrade by Bank of America.
BofA lowered Flutter to 'neutral' from 'buy' with tax risks in the UK as one reason for the downward move.
Brent oil was quoted lower at USD64.48 a barrel at the time of the London equities close on Tuesday, from USD65.08 late Monday.
Gold traded lower at USD3,971.09 an ounce against USD3,997.03.
The biggest risers on the FTSE 100 were Convatec, up 6.20 pence at 245.00p, Land Securities, up 12.50p at 627.50p, GSK, up 32.50p at 1,789.50p, Segro, up 11.60p at 708.60p and Smith & Nephew, up 21.50p at 1,417.50p.
The biggest fallers on the FTSE 100 were JD Sports Fashion, down 4.28p at 85.80p, Burberry, down 46.50p at 1,168.50p, Entain, down 27.20p at 761.80p, Hikma Pharmaceuticals, down 58.00p at 1,763.00p and Antofagasta, down 82.00p at 2,663.00p.
Wednesday's global economic calendar has composite PMI readings in the UK, US and the eurozone plus ADP private payroll data in the US.
Wednesday's UK corporate calendar has half-year results from food and clothing retailer Marks & Spencer plus trading statements from housebuilder Barratt Redrow, engineer Weir Group, and pub operator JD Wetherspoon.
By Jeremy Cutler, Alliance News reporter
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