London close: Falling bank stocks, rising bond yields hammer FTSE 100

(Sharecast News) - Rising bond yields and a shortened trading week were contributing to sharp falls for UK stocks on Tuesday, with the FTSE 100 dropping 1.4% by the close of play. Despite a solid performance across Europe and the US - the Stoxx 600 was 0.7% higher while the S&P 500 and Nasdaq were on track for record closing highs - the Footsie dropped 144.8 points to 10,219.11, with banking giant HSBC leading the decline.

UK traders were playing catchup from Monday, when global stock markets were weighed down by a renewed rise in tensions between the US and Iran with the ceasefire looking increasingly fragile.

"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," said Axel Rudolph, chief technical analyst at IG. "UK 30-year borrowing costs rising to their highest level since 1998 amid the oil price surge and political instability also weighed on sentiment."

The yield on a 30-year Gilt was up 8.3 basis points at 5.734%, while 10-year Gilt yields were 8.5bp higher at 5.056%, closing in on levels not seen since 2008. Brent crude, meanwhile, was pulling back nearly 4% to $110.01 a barrel after surging to $114.44 the previous session.

HSBC provides a drag

London's banking sector was weighing heavily after HSBC posted a surprise fall in quarterly earnings despite a spike in net interest income. 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, but pre-tax profits fell to $9.4bn from $9.5bn, reflecting "higher expected credit losses and other credit impairment charges" in the quarter.

Sector peers Lloyds, Standard Chartered, Barclays and NatWest were also in the red, while financial services giant Legal & General was knocked lower by a downgrade to 'underperform' at Jefferies, which said "LGEN's income story is deteriorating".

On the upside, Intertek surged 6% 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.

On the FTSE 250, the ongoing rally in Ceres Power's share price showed no signs of abating as hype about the AI boom continues to fuel the demand outlook for its solid oxide tech, which is used in data centres. The stock has now soared 250% since the start of the year, and was up 17% on the day.

Chrysalis Investments shares slumped 7% as it reported a drop in first-quarter net asset value, pointing to write-downs for Starling and Klarna. The company also said it was transitioning to a self-managed model, designed to ensure it continues to exercise "robust" portfolio management and oversight of its assets.

Market Movers

FTSE 100 (UKX) 10,219.11 -1.40% FTSE 250 (MCX) 22,443.81 -0.39% techMARK (TASX) 5,902.86 0.66%

FTSE 100 - Risers

Intertek Group (ITRK) 5,090.00p 5.95% Spirax Group (SPX) 7,372.00p 3.86% BAE Systems (BA.) 2,077.00p 2.09% Compass Group 11 (CPG) 28.80p 1.95% The Sage Group (SGE) 908.60p 1.91% 3i Group (III) 2,611.50p 1.87% Mondi (MNDI) 782.00p 1.80% BT Group (BT.A) 220.45p 1.71% Metlen Energy & Metals (MTLN) 37.68p 1.62% Bunzl (BNZL) 2,446.00p 1.36%

FTSE 100 - Fallers

HSBC Holdings (HSBA) 1,279.80p -5.86% Entain (ENT) 531.20p -5.85% Marks & Spencer Group (MKS) 321.50p -4.75% Fresnillo (FRES) 3,115.00p -4.30% Weir Group (WEIR) 2,490.00p -4.23% NATWEST GROUP (NWG) 545.00p -3.88% Lloyds Banking Group (LLOY) 94.90p -3.64% Legal & General Group (LGEN) 246.20p -3.55% Unilever (ULVR) 4,264.50p -3.23% Standard Chartered (STAN) 1,819.40p -3.07%

FTSE 250 - Risers

Ceres Power Holdings (CWR) 745.50p 17.03% NCC Group (NCC) 140.60p 9.33% AEP Plantations (AEP) 1,900.00p 6.74% Trustpilot Group (TRST) 272.80p 4.84% Pacific Horizon Inv Trust (PHI) 1,060.00p 3.31% Raspberry PI Holdings (RPI) 674.00p 3.18% Templeton Emerging Markets Inv Trust (TEM) 293.00p 3.17% Schroder Oriental Income Fund Ltd. (SOI) 411.00p 3.14% Schroder Asia Pacific Fund (SDP) 774.00p 2.79% JPMorgan Emerging Markets Dividend Income (JEMI) 194.50p 2.64%

FTSE 250 - Fallers

WH Smith (SMWH) 477.20p -7.52% Chrysalis Investments Limited NPV (CHRY) 81.80p -6.51% Bluefield Solar Income Fund Limited (BSIF) 79.90p -4.65% SSP Group (SSPG) 149.50p -4.45% Shawbrook Group (SHAW) 314.50p -4.41% Oxford Nanopore Technologies (ONT) 112.80p -4.33% Rank Group (RNK) 92.00p -4.17% Applied Nutrition (APN) 207.50p -3.94% Spire Healthcare Group (SPI) 158.40p -3.88% easyJet (EZJ) 343.20p -3.87%