The FTSE 100 is currently trading at 10,244.03, reflecting a decline of approximately 1.16% as of mid-day on May 5, 2026. This sharp slide marks a challenging return for traders after the early May bank holiday. The index fell on Tuesday, its first session after the long weekend, underperforming European peers as weakness in HSBC Holdings PLC weighed on the index. According to reports from Investing.com India, HSBC shares dropped around 5% after first-quarter profits missed expectations, hit by an unexpected fraud-related charge in the UK and rising credit provisions linked to growing economic risks from the Middle East conflict.
The FTSE 100 fell on Tuesday, its first session after the long weekend, underperforming European peers as weakness in HSBC Holdings PLC weighed on the index. According to reports from Investing.com India, HSBC shares dropped around 5% after first-quarter profits missed expectations, hit by an unexpected fraud-related charge in the UK and rising credit provisions linked to growing economic risks from the Middle East conflict. The bank reported pre-tax profit of $9.4 billion, below forecasts of $9.6 billion. While performance in wealth management and Hong Kong remained resilient and the bank upgraded its net interest income outlook, results were overshadowed by a $1.3 billion expected credit loss. The results included an upgraded full-year net interest income guidance, similar to that seen from peers last week, giving investors "some comfort that the income engine still has fuel in the tank," as noted by analysts. However, HSBC's shares fell as much as 6.3% in London following the disappointing results.
The unexpected fraud-related charge included a $400 million fraud-related charge and a further $300 million increase in allowances tied to the deteriorating global economic outlook. As reported by Investing.com India, the escalation in geopolitical tensions is particularly significant for HSBC, which has focused on Asia and the Middle East as key growth regions. The conflict now risks undermining those expansion plans, raising uncertainty over future earnings. HSBC has also been undergoing a major restructuring over the past 18 months aimed at simplifying the business and reducing costs, though the outbreak of the US–Iran conflict has since put the stock under pressure. Credit impairment charges rose to $1.3 billion, up $0.4 billion from a year ago, driven by a $0.4 billion fraud-related exposure in the UK and a $0.3 billion increase in provisions linked to a weaker economic outlook following the onset of conflict in the Middle East. The first quarter last year had also seen higher-than-normal expected credit losses due to geopolitical tensions and higher trade tariffs.
Beyond HSBC, the banking sector faced broad-based pressure with sector peers Lloyds Banking, Standard Chartered, Barclays and NatWest all declining over 2%. According to latest reports, there are nine of the Footsie's 20 largest companies down by at least 1%, with only seven of the 30 largest companies in green. The sector's performance reflects broader concerns about the impact of geopolitical tensions on financial institutions, particularly those with significant exposure to Middle Eastern markets. The FTSE 100 has plunged lower in early trading, dropping 102 points to 10,267, with the index's largest company HSBC leading the decline. HSBC is down 5.5%, with Lloyds and Standard Chartered both down over 2.5%, and NatWest and Barclays down either side of 1.5%. HSBC joins a long list of financial institutions caught up in MFS's sudden implosion, alongside Banco Santander SA, Barclays Plc, Jefferies Financial Group Inc., and Wells Fargo & Co.
While HSBC struggled, other European banks showed more positive results during the 2026 earnings season. According to recent reports, Italy's UniCredit surpassed market expectations and demonstrated a strong start to the year, leading the bank to upgrade its financial guidance for the rest of 2026. This contrasts with HSBC's performance, though last week Deutsche Bank, Santander and UBS all reported rising profits, indicating that the European banking sector remains strong overall despite HSBC's underperformance. This earnings season occurs as investors weigh the impact of the Iran war and the persistence of high interest rates on corporate profits across the Eurozone and the UK, highlighting the diverse performance across major European banking institutions. HSBC analysts at Jefferies noted that "the results contained a fair amount of noise across revenue and cost lines, but the underlying picture is one of a mildly stronger banking NII print and ongoing strength in wealth," rating the shares a hold.
