UK Budget and Fed decision loom as FTSE dips

The FTSE 100 fell on Tuesday as HSBC missed revenue forecasts, while Wall Street's Nasdaq, S&P 500 and Dow all closed higher on an AI-driven rally. Oil and the dollar both firmed, while gold slipped, as markets positioned for Wednesday's UK Autumn Budget and the Federal Reserve's rate decision. Microsoft and Alphabet report results after Wednesday's close.

Equities

Britain's FTSE 100 fell 0.75% on Tuesday, its biggest one-day decline in about a month, as investors turned cautious ahead of Wednesday's Autumn Budget. The FTSE 250 gained 0.93%, outperforming its blue-chip peer. European markets were broadly mixed as banks came under pressure across the region.

HSBC dropped sharply after third-quarter revenue of $18.6 billion missed analysts' forecasts of around $19 billion, with the bank citing a slowdown in its wealth business. It was the single biggest drag on the index. NatWest and Lloyds also fell in sympathy, though Barclays firmed.

Reckitt Benckiser fell after cutting its annual net revenue growth forecast, dragging the wider household goods sector into negative territory. Informa rose despite cutting its full-year revenue growth guidance to 3% from 6%, after security concerns in the Middle East forced it to reschedule events in Saudi Arabia. Computacenter climbed after Stifel raised its price target on the IT services group.

Britain and the EU are reported to be working through concerns over the bloc's proposed manufacturing rules, which have unsettled British exporters ahead of Wednesday's budget.

Wall Street closed higher on Tuesday, led by technology and semiconductor shares. The S&P 500 rose 0.60% and the Nasdaq Composite jumped 1.18%, while the Dow Jones Industrial Average was little changed, up 0.03%.

Broadcom climbed after a group of banks and Blackstone announced $63 billion in financing for Anthropic's purchase of its chips, while Micron and AMD also rallied on continued AI-infrastructure demand. Meta Platforms slipped after lifting its planned equity fundraising to $97.5 billion to fund its AI build-out.

Earnings reaction elsewhere was mixed. JetBlue jumped despite reporting a bigger-than-expected quarterly loss, on a stronger margin outlook, while United Parcel Service rose after beating third-quarter estimates. Boeing fell sharply after a larger-than-expected loss, and Royal Caribbean climbed after raising its full-year profit forecast.

Investors are now looking ahead to Wednesday's Federal Reserve rate decision, along with earnings from Microsoft and Alphabet, both due after the US market close.

Forex & Commodities

The dollar held firm on Wednesday, hovering near a two-week high ahead of the Federal Reserve's policy decision later on Wednesday. The dollar index was little changed, up around 0.1%, with traders positioned for the Fed's guidance on the pace of any future easing.

The pound slipped against the dollar, while the euro was little changed, as both currencies took a back seat to the Fed. Sterling traders are also watching Wednesday's Autumn Budget for signs of how the government plans to balance the public finances.

The New Zealand dollar tumbled after the Reserve Bank of New Zealand unexpectedly held interest rates, confounding economists who had largely expected a hike. The central bank also signalled further rate increases at coming meetings, which helped the currency trim some of its losses.

Gold eased on Wednesday, holding above the $4,000 mark, as rising oil prices stoked inflation worries and reinforced expectations that the Fed will stay cautious on cutting rates. Silver, platinum and palladium also slipped.

Oil rose on Wednesday, snapping a two-session losing streak, after reports emerged that Washington had urged Gulf states to prepare for a possible new military campaign against Iran following the US midterm elections. Investors were also watching Israel's tightly contested election, with vote counting still ongoing between the incumbent and his main challenger. Traders will also parse the week's US crude inventory data on Wednesday afternoon for further clues on supply.

The Federal Reserve's rate decision is due on Wednesday evening UK time, with markets widely expecting policymakers to hold rates steady while leaving the door open to a move in December.