London midday: FTSE stays down ahead of Budget but banks rally

28th Oct 2026 11:55

(Sharecast News) - London stocks were still a little weaker by midday on Wednesday as investors eyed Chancellor John Healey's first Autumn Budget, although banks rallied following a report the bank tax will be less severe than feared.

The FTSE 100 was down 0.3% at 10,653.59.

The Budget is due at around 1230 GMT and the Office for Budget Responsibility's updated Economic and Fiscal Outlook will also be published.

Danske Bank said Healey is expected to stick to the fiscal rules introduced by his predecessor Rachel Reeves, and with little room to manoeuvre, a cautious budget is expected. "Income tax, National Insurance, VAT and capital gains tax rates have been ruled out, so any new revenue is likely to come from narrower sources such as banks, gambling and property. Some targeted cost-of-living support is also expected," it said.

Ahead of the Budget, the Treasury confirmed that standing charges on gas bills will be scrapped from next year "or as soon as possible after". Instead, fixed costs will be paid on the unit rate.

It was also reported that the Chancellor will abandon plans to cut the annual cash ISA allowance from £20,000 to £12,000 a year. According to the Financial Times, Healey concluded it was the wrong way to persuade people to invest more in stocks and shares.

Tom Selby, director of public policy at AJ Bell, said: "Rachel Reeves' ISA reforms were a car crash, lamented by most of the retail investment industry, who criticised the complexity they would add for little consumer benefit, and building societies, who warned they would increase mortgage costs. Given the Prime Minister's main focus is on easing cost-of-living pressures, we shouldn't be surprised the cash ISA cut is set to be unceremoniously ditched.

"We assume this means the awful measures designed to prevent people circumventing the proposed Cash ISA cut, including taxing interest earned on cash and cash-like investments in a Stocks and Shares ISA and banning transfers from Stocks and Shares ISAs to Cash ISAs, will also be binned. However, undoing Rachel Reeves' calamitous reform agenda should just be the first step - the chancellor now has an opportunity to deliver on Labour's pre-election pledge to radically simplify the ISA landscape."

Meanwhile, Bloomberg reported that Healey was set to announce a less severe than expected hike in bank taxes. It said the Chancellor will increase the bank surcharge, currently levied at 3% on top of the 25% corporation tax rate, but won't return it to the previous 8% level it stood at until 2023. It was also understood that the measure will be temporary.

Across the pond, the Federal Reserve was widely expected to leave its benchmark interest rate unchanged at between 3.75% and 4.00% when it makes its latest policy announcement at 1900 GMT. Investors will also be turning their attention to quarterly earnings from Google-owner Alphabet and Microsoft.

In equity markets, Standard Chartered shot higher as it lifted its full-year income and return guidance and posted better-than-expected third-quarter profit. In the three months to September end, pre-tax profit rose 27% on the same period a year earlier to $2.25bn, beating analysts' expectations of $1.99bn. Operating income grew 14% $5.8bn, driven by a third successive record quarter in Wealth Solutions, along with strong growth in Global Markets and Global Banking, the bank said.

For 2026, the bank now expects operating income growth above a previous range of 5% to 7% and return on tangible equity of around 14%, up from previous guidance of more than 12%.

Banks more generally were on the rise following the Bloomberg report, with Lloyds, Barclays and NatWest among the top performers on the FTSE 100.

On the downside, GSK slid even as the pharmaceuticals giant reported a 5% increase in third-quarter sales, driven by strong growth in specialty medicines, and reaffirmed its full-year guidance.

Consumer goods giant Unilever fell despite upping its full-year guidance after delivering another quarter of solid volume‑led growth, with underlying sales up 5.2% and turnover rising 6.7% to €13.3bn. Unilever now expects at least 3% underlying volume growth for FY26 and underlying sales growth of around 5% in the second half.