London midday: FTSE under pressure as banks slump; Middle East tensions in focus

(Sharecast News) - London stocks were still firmly in the red by midday on Tuesday, with banks pacing the decline after disappointing results from HSBC, amid growing tensions between the US and Iran.

The FTSE 100 was down 1% at 10,257.00, while Brent crude was 1.2% lower at $113.02 a barrel.

Susannah Streeter, chief investment strategist at Wealth Club, said: "The reignition of hostilities in the Middle East has fired up oil prices again, keeping investors on edge about the duration of the conflict. London's FTSE 100 is in a downbeat mood, as wariness rises about how difficult the complex situation will be to resolve. Investors are also on edge as fears of interest rate hikes rise, and there's fresh political uncertainty in the mix ahead of key local elections on Thursday.

"The Middle East situation is dominating, with the ceasefire looking increasingly fragile after an Iranian drone strike on the UAE's Fujairah oil facility and reports that two US ships entering the Strait of Hormuz were also attacked. Brent crude shot up to trade around $114 a barrel before easing slightly, as hopes for a significant resumption of oil shipments from the region are being dashed again. The fresh fracture in the region comes following President Trump's 'freedom' plan aimed at restoring shipping through the Strait of Hormuz.

"Shipowners and their insurers are set to stay super-cautious about vessels using the key waterway, given the risks of mines, small boat strikes, and potential drone attacks. However, the longer prices at the pumps stay elevated, hitting the wallets of millions of Americans amid looming mid-term elections, the more pressure will build on President Trump to find a resolution. But it's clear Iran is preparing to play hardball in negotiations, given its clear leverage over the Strait of Hormuz."

In equity markets, HSBC tumbled as it posted a surprise fall in quarterly earnings despite a spike in net interest income, after credit impairments rose at Europe's largest lender.

The bank saw revenues rise by an above-forecast 6% in the first quarter to $18.6bn, with net interest income 8% stronger at $8.9bn and an 18% hike in fees in its wealth division, to $2.7bn. However, pre-tax profits fell to $9.4bn from $9.5bn a year previously, missing forecasts for around $9.6bn, reflecting "higher expected credit losses and other credit impairment charges" in the quarter.

HSBC said expected credit losses had risen by $400m to $1.3bn, including a loss relating to a British fraud case and a $300m increase in allowances "to reflect heightened uncertainty and a deterioration in the forward economic outlook due to the onset of the conflict in the Middle East". It also flagged wider geopolitical tensions and higher trade tariffs.

Other banks followed suit, with Lloyds, Standard Chartered, Barclays and NatWest also weaker.

Legal & General was knocked lower by a downgrade to 'underperform' at Jefferies.

Chrysalis Investments slumped as it reported a drop in first-quarter net asset value, pointing to write-downs for Starling and Klarna, and said it was moving to a self-managed structure.

Vodafone reversed earlier gains after agreeing to buy CK Hutchison's stake in mobile operator and broadband provider VodafoneThree for �4.3bn, taking full ownership of the joint venture.

On the upside, Intertek surged after Swedish private equity firm EQT sweetened its takeover proposal for the inspection, product testing and certification group. EQT's latest offer of 5,800p was up from previous offers of 5,400p and 5,150p per share.

Plus500 edged up after saying it remains confident in its outlook for FY26 following a better-than-expected performance in the first quarter. The fintech group had already lifted its full-year profit outlook in April, saying it expected 2026 revenue and earnings before interest, tax, depreciation and amortisation to be ahead of market expectations of $779.3m and $360.4m respectively.

Market Movers

FTSE 100 (UKX) 10,257.00 -1.03%

FTSE 250 (MCX) 22,553.88 0.10%

techMARK (TASX) 5,901.68 0.64%

FTSE 100 - Risers

Intertek Group (ITRK) 5,136.00p 6.91%

BT Group (BT.A) 224.65p 3.78%

BAE Systems (BA.) 2,075.00p 2.11%

Spirax Group (SPX) 7,240.00p 2.09%

Compass Group 11 (CPG) 28.65p 1.50%

Pearson (PSON) 1,129.00p 1.35%

The Sage Group (SGE) 902.80p 1.32%

Babcock International Group (BAB) 1,113.50p 1.27%

IG Group Holdings (IGG) 1,536.50p 1.18%

Mondi (MNDI) 777.00p 1.15%

FTSE 100 - Fallers

HSBC Holdings (HSBA) 1,285.80p -5.55%

Weir Group (WEIR) 2,502.00p -3.69%

Entain (ENT) 548.60p -3.31%

Fresnillo (FRES) 3,159.00p -3.16%

Lloyds Banking Group (LLOY) 95.69p -2.86%

Haleon (HLN) 334.20p -2.79%

InterContinental Hotels Group (IHG) 140.65p -2.72%

Standard Chartered (STAN) 1,828.20p -2.70%

Legal & General Group (LGEN) 248.50p -2.62%

Metlen Energy & Metals (MTLN) 36.10p -2.62%

FTSE 250 - Risers

Ceres Power Holdings (CWR) 694.00p 8.95%

AEP Plantations (AEP) 1,934.00p 8.65%

NCC Group (NCC) 138.80p 7.93%

Aston Martin Lagonda Global Holdings (AML) 43.52p 5.22%

Trustpilot Group (TRST) 272.20p 4.77%

JPMorgan Emerging Markets Dividend Income (JEMI) 196.00p 3.43%

Raspberry PI Holdings (RPI) 673.25p 3.10%

Oxford Biomedica (OXB) 611.00p 3.04%

Ithaca Energy (ITH) 273.40p 2.97%

Schroder Oriental Income Fund Ltd. (SOI) 410.00p 2.89%

FTSE 250 - Fallers

Chrysalis Investments Limited NPV (CHRY) 81.90p -6.40%

Carnival (CCL) 1,871.50p -5.41%

Genuit Group (GEN) 244.20p -3.55%

Hochschild Mining (HOC) 597.50p -3.32%

Investec (INVP) 611.50p -2.86%

Dr. Martens (DOCS) 60.50p -2.73%

Shawbrook Group (SHAW) 320.75p -2.51%

THG (THG) 30.18p -2.46%

RHI Magnesita N.V. (DI) (RHIM) 2,660.00p -2.39%

C&C Group (CDI) (CCR) 116.20p -2.35%