London, May 5, 2026, 18:06 BST
UK equities took a hit Tuesday. The FTSE 100 dropped 1.4% to 10,219.1, marking its steepest single-day decline since late March, as HSBC’s unexpected loss and renewed inflation jitters weighed on banks and travel stocks coming out of the long weekend. The FTSE 250 slipped 0.4%.
This wasn’t just about one bank. HSBC’s $400 million hit put a spotlight on banks’ private credit exposure—those loans handed out by funds and non-bank players, often beyond the reach of public markets—just as regulators dig deeper into the space. “Lacklustre,” is how KBW’s Ed Firth summed up the numbers. Barclays, according to Reuters, took a 228 million-pound charge linked to the same MFS fallout. Standard Chartered, for its part, saw wealth growth outpace HSBC’s during the quarter. Reuters
The bond market threw in another obstacle. Yields on thirty-year gilts—UK government bonds—climbed to levels last seen in 1998. Surging energy prices and political jitters have been driving up borrowing costs. That higher yield? It’s what investors want for holding government debt, and as it rises, government, mortgage, and corporate funding all get more expensive.
HSBC reported a dip in first-quarter pretax profit, down $0.1 billion to $9.4 billion, though revenue—excluding notable items—ticked up. The lender bumped its 2026 credit-loss guidance to roughly 45 basis points of average gross loans, up from the earlier 30–40 basis-point range it had planned. Group CEO Georges Elhedery said the firm still backs the targets laid out in February.
Pam Kaur, HSBC’s finance chief, characterized the case as “idiosyncratic” in comments to reporters. She said a review of high-risk exposures hadn’t revealed anything similar. “We’ve always been very mindful of private credit risks,” Kaur said, noting the bank’s credit portfolio remained resilient even during the Middle East turmoil. The Guardian
Banks took a hit: HSBC dropped 5.9%, Lloyds slipped 3.4%, NatWest shed 3.6%, and Barclays was down 3.3%. Citi’s Andrew Coombs called the UK charge “not expected.” Dan Coatsworth at AJ Bell pointed out the big fraud-related provision serves as a reminder that risk isn’t limited to “more far-flung parts of the world.” Intertek bucked the trend, jumping 6.0% after EQT sweetened its bid proposal. BT climbed as well, following an upgrade from Bank of America. MarketScreener
Losses didn’t play out evenly around the world. Brent crude pulled back roughly 3%, yet held close to $111 a barrel. Over in Europe, the STOXX 600 added about 0.6%. U.S. stocks also advanced, buoyed by earnings. For London, though, banks and rate-sensitive shares look exposed: another oil rally, softening gilts, or fresh credit jitters could keep them under strain regardless of any broader rebound in equities.
The UK stock market isn’t acting like a safe haven right now; instead, it’s running through a gauntlet of pressure on banks, energy costs, and nerves in the bond market. HSBC threw the first punch. Gilts dragged things down further.
