Europe close: HSBC drags London down on mixed day for stocks

5th May 2026 16:28

(Sharecast News) - European stock markets rose on Tuesday despite ongoing tensions in the Middle East, although weakness in London limited gains for the wider benchmark after HSBC's results weighed heavily on UK banks.

The pan-European Stoxx 600 gained 0.68% to 609.62.

Germany's DAX rose 1.67% to 24,392.27 and France's CAC 40 advanced 1.08% to 8,062.31, while London's FTSE 100 fell 1.4% to 10,219.11.

Oil prices retreated, with Brent crude futures last down 3.47% on ICE at $110.47 per barrel, and the NYMEX quote for West Texas Intermediate 4% lower at $102.16.

"The Reserve Bank of Australia oversaw its third consecutive rate hike, citing persistent inflation pressures driven by capacity constraints and higher energy costs, while warning risks remain skewed to the upside amid ongoing geopolitical tensions," noted Axel Rudolph, chief technical analyst at IG.

"Nonetheless European and US stock indices resumed their ascents as bargain hunters made the most of the previous day's weaker session.

"Investors looked past Middle East tensions and refocused on earnings and upcoming US employment reports.

"Crude prices falling by over 3% and US exports hitting a record high in March also provided a positive tailwind which extended to precious metals and cryptocurrencies such as Bitcoin, which hit a 3-month high above $81,000."

New car registrations jump in the UK

On the economics front, UK new car registrations rose 24% in April to 149,247, the strongest April outturn since 2019, according to the Society of Motor Manufacturers and Traders.

The trade body said the figures were helped by an especially weak comparison with April 2025, when buyers brought purchases forward ahead of higher vehicle taxes, but also reflected strong demand for electric vehicles as fuel prices climbed following the Middle East war.

Battery electric vehicle registrations rose 59.1% year-on-year to 39,084, while plug-in hybrid sales increased 46.4% to 20,597.

The SMMT said more than 2m EVs had now been registered.

Petrol registrations rose 8.2% to 63,541, while diesel demand fell 1%.

"April's rebound is welcome, but underlines just how significantly fiscal changes can influence the market," said Mike Hawes, SMMT chief executive.

He added that while the 2m EV milestone was considerable, "natural demand is still well below the level demanded by the mandate".

Jamie Hamilton, automotive partner and head of EVs at Deloitte, said higher fuel prices were encouraging more drivers to consider electric cars.

"With 88% of UK consumers expecting fuel prices to be higher next month, it is clear why interest in EVs is proving resilient, as drivers look for lower running costs and greater price certainty," he said.

Rudolph said the UK market had failed to join the wider rally despite the stronger car sales data.

"In the UK car sales rose the most since 2019, but despite this the FTSE 100 didn't partake in Tuesday's rally and instead dropped by over 1.5%, weighed down by financials, real estate and utilities.

"HSBC shares slumped by 6% on a surprise $400m 'fraud-related' charge linked to the MFS collapse, dragging other banks and insurers such as Lloyds, Legal & General and Standard Chartered down with it.

"UK 30-year borrowing costs rising to their highest level since 1998 amid the oil price surge and political instability also weighed on sentiment."

HSBC leads UK banks lower, UniCredit manages solid gains

In equity markets, HSBC indeed fell 7.5% after the bank posted a surprise fall in quarterly earnings despite stronger revenue and net interest income.

Revenue rose 6% in the first quarter to $18.6bn, ahead of forecasts, while net interest income increased 8% to $8.9bn.

However, pre-tax profit slipped to $9.4bn from $9.5bn a year earlier, reflecting "higher expected credit losses and other credit impairment charges".

"London's FTSE 100 traded sharply lower on Tuesday, sliding around 1% as a weak response to HSBC's results and another surge in oil prices weighed on sentiment," commented Patrick Munnelly, market strategy partner at TickMill.

"The move stood out because broader European equities were firmer, with regional markets supporting upbeat earnings, while London underperformed.

"That divergence reinforced the same theme seen over recent sessions - the FTSE is still highly sensitive to its heavyweight financials and to the inflationary implications of higher energy prices, even when other global markets are finding reasons to rally."

HSBC's decline weighed on the wider London banking sector.

Lloyds Banking Group fell 4.78%, Standard Chartered dropped 4.28%, and Barclays and NatWest both lost 4%.

Munnelly said HSBC was "the key single-stock pressure point".

"In a market already focused on the Bank of England's cautious stance and the risk that sticky inflation delays easier policy, any weakness from a major lender carries outsized index weight.

"The issue was not simply one bank's earnings; it was what the reaction said about investor tolerance.

"After several weeks of geopolitical stress, higher oil, and uncertainty over rates, the market is still quick to punish any large-cap update that fails to deliver a clean beat or a confident outlook."

In contrast, UniCredit rose 5.87% in Milan after upgrading its full-year profit outlook and posting better-than-expected first-quarter earnings.

The Italian lender also launched a €35bn all-share offer for Commerzbank despite opposition from the German bank and Berlin, sending Commerzbank shares higher in Frankfurt.

Banco Sabadell edged up 0.65% after reporting a sharper-than-expected drop in first-quarter profit, as lower interest rates weighed on lending income and costs rose because of one-off charges linked to restructuring and the sale of its UK unit TSB.

Net profit fell 29% year-on-year to €347m, below the €424m expected by analysts in a Reuters poll, while net interest income fell 3.5% to €872m.

Anheuser-Busch InBev jumped 9.34% in Brussels after first-quarter sales and profits beat expectations.

The Stella Artois maker reported a 5.8% rise in revenue to $15.3bn, while volumes unexpectedly increased 0.8%.

Hugo Boss rose 0.5% after the German fashion group reported a decline in quarterly sales and profits that was less severe than analysts had feared.

Group sales fell 9% to €905m, or 6% on a constant currency basis, reflecting a planned brand and channel realignment, while earnings before interest and tax declined to €35m from €61m a year earlier.

Analysts had expected EBIT of €30m and revenue of €887m.

In Zurich, Geberit slipped 0.35%, reversing earlier gains after the Swiss plumbing materials supplier reported a first-quarter sales decline in line with expectations.

Elsewhere, Ferrari fell 3.95% despite beating first-quarter expectations and maintaining full-year guidance, as the Middle East conflict prompted the sports car maker to adjust deliveries to other regions.

Deliveries fell 4.4% year-on-year to 3,436 units, although Ferrari said the overall figure was not affected by the Iran war because it used "geographical allocation flexibility" to bring forward certain deliveries elsewhere.

Revenue rose 3% to €1.85bn, operating profit increased 1% to €548m, and earnings per share rose 1% to €2.33.

Reporting by Josh White for Sharecast.com.