Good morning and welcome back to the City AM liveblog for Wednesday 28 January 2026. The financial markets have opened with significant movements as the pound sterling experienced a notable decline following comments from Chancellor Rachel Reeves that raised concerns about potential tax increases.
Precious Metals Surge Fails to Lift Mining Sector
The remarkable rally in precious metals continued unabated on Tuesday, with gold breaking through the psychologically significant $5,100 per ounce barrier for the very first time in trading history. Silver followed this impressive trajectory, climbing nearly eight per cent during the morning session to reach unprecedented levels.
Despite these extraordinary gains in the underlying commodities, the mining sector experienced a substantial downturn. Fresnillo, which had been the standout performer among FTSE 100 constituents throughout 2025, suffered a sharp decline of almost seven per cent. Endeavour Mining followed this downward trend with a nearly five per cent drop, indicating a broader sectoral weakness that persisted even as metals maintained their elevated positions well above the $5,000 milestone at market close.
Banking Giants Seize Market Leadership
As mining stocks retreated, London's banking institutions stepped into the spotlight, orchestrating a blue-chip rally that propelled the FTSE 100 into positive territory. This financial sector surge occurred strategically ahead of the industry's comprehensive full-year earnings reports, creating substantial momentum across the market.
HSBC emerged as the unequivocal leader of this banking renaissance, achieving gains that elevated its market capitalisation beyond the $300 billion threshold. This remarkable achievement allowed the global banking giant to surpass pharmaceutical behemoth AstraZeneca, claiming the prestigious title of London's most valuable publicly traded company.
Chris Beauchamp, chief market analyst at IG, provided insightful commentary to City AM, noting: "Were it not for HSBC's gains today the index would be struggling to make any headway at all, despite yet more gains for gold and silver." This observation underscores the pivotal role banking institutions played in supporting the broader market index during this trading session.
Broad-Based Banking Strength
The banking sector's resurgence demonstrated impressive breadth, with multiple institutions recording substantial advances:
- Natwest Group advanced nearly three per cent, reaching 668.40p – its highest valuation since the global financial crisis
- Lloyds Banking Group increased just under two per cent to 104.80p
- Barclays climbed 1.7 per cent to reach 488.80p
This collective strength among financial institutions created a counterbalance to the mining sector's difficulties, illustrating the dynamic nature of London's equity markets where leadership can shift rapidly between different industrial sectors.
Market Outlook and Key Questions
As trading commences on Wednesday, market participants face several crucial questions. Will the mining sector regain investor favour following the extraordinary commodity price movements, or will financial institutions continue to dominate trading activity? The relationship between underlying commodity performance and mining stock valuation appears to have decoupled temporarily, creating intriguing opportunities for astute investors.
We will continue to provide comprehensive coverage throughout the trading day, bringing you the latest developments, expert analysis, and market-moving information as it becomes available.
Yesterday's Top Financial Stories
While today's focus remains on currency movements and equity market dynamics, several significant developments emerged during Tuesday's trading session:
- Hospitality group Revolution Bars announced approximately 600 job losses as part of a rescue deal that will close more than twenty establishments
- The government's £300 million tax relief package for pubs faced criticism as being merely "a sticking plaster" solution
- Online travel platform Loveholidays is reportedly preparing for a potential £1 billion London initial public offering as early as March
- Former West Midlands Mayor Andy Street argued that Conservative electoral success requires embracing centre-right policies to counter Reform UK's influence
- Food price inflation is expected to continue rising despite broader predictions of easing inflationary pressures
The London markets continue to demonstrate their complexity and dynamism, with currency fluctuations, sector rotations, and corporate developments creating a rich tapestry of investment opportunities and challenges for market participants navigating these uncertain economic times.
