UK's FTSE 100 muted as GSK, Unilever losses temper bank gains after budget

By Darshan Kumar R

Oct 28 - UK shares closed subdued on Wednesday, as gains in banks after a lower-than-feared levy in finance minister John Healey's first budget were countered by declines in Unilever and GSK after their results failed to impress investors.

The blue-chip FTSE 100 index ended 0.1% higher, while the midcap FTSE 250 reversed course to close 0.3% lower. It had touched a near two-month high earlier in the session. 

Banks were the biggest boosts to the index, up 1.1%. Shares of Lloyds Banking Group, NatWest and Barclays rose between 1% and 2% after Healey announced a temporary increase in the bank profit surcharge to 6% from 3% for 15 months, a rise that was less than feared.

"The move to raise the UK bank surcharge to 6% looks like a halfway compromise and it seems to have been taken very well by the market," said Christopher Peters, head of trading at Accendo Markets.

The sector was also supported by a 2.4% gain in Standard Chartered as the bank hiked its full-year growth and profitability targets after third-quarter income handily beat estimates.

UK betting firms also rose after Healey announced a smaller-than-feared gambling tax increase. Entain rose 3.6% and Evoke rose 3.7% after Machine Games Duty was raised to 25% from 20%.

Healey announced support to help households through the "global economic storms" with subsidies for energy bills and a freeze in fuel duty. British bond, stock and currency markets were largely sanguine after the announcement.

On the flip side, a lack of clarity on the timeline and funding of a much-awaited scheme to help first-time home buyers hit British homebuilder stocks, which tumbled 6% in their biggest one-day drop since January 2025.

Taylor Wimpey, Persimmon and Barratt Redrow all lost more than 6.5%.

FED DECISION, TECH EARNINGS IN FOCUS

Investors are awaiting the Federal Reserve's monetary policy decision as well as earnings from big US technology firms for insights into the interest-rate trajectory and the health of the AI trade — factors that have been the main drivers of financial markets this year.

Closer to home, investors are weighing what Healey's budget means for the Bank of England's interest-rate path.

"The Bank of England will ultimately have to consider domestic conditions, with UK growth forecast at around 1%, and avoid putting further strain on the economy through excessive rate hikes," said Evangelos Assimakos, senior investment director at Rathbones.

Brent crude futures rose 1.6% to $115.69 a barrel as continued fighting in Yemen and an attack on Saudi Arabian infrastructure renewed concerns about supply disruptions, lifting the broader energy sector 0.8%. [O/R]

Among notable earnings, GSK dropped 4.8% as its pipeline-build push and growth plans via a £1.9 billion ($2.5 billion) cost-saving programme failed to convince investors.

Unilever fell 2.1% after reporting softer results in its foods business, dragging the personal care, drug and grocery sector down nearly 1.4%.   

(Reporting by Darshan Kumar and Purvi Agarwal in Bengaluru; Editing by Joyjeet Das, Tasim Zahid and Xevi Fontdegloria)