UK equities traded largely unchanged on Monday after Prime Minister Keir Starmer announced his resignation, setting in motion a contest to choose a new Labour leader, while investors remained focused on developments in U.S.-Iran negotiations and their implications for global markets.
The FTSE 100 slipped 0.03% by 08:47 GMT, while Germany’s DAX declined 0.27% and France’s CAC 40 eased 0.42%. Sterling weakened 0.25% against the U.S. dollar to 1.3201.
Starmer Announces Resignation
Keir Starmer confirmed he would step down as both Prime Minister and Labour Party leader, stating that he had informed the King of his decision and requested that Labour’s National Executive Committee begin the process of selecting a successor. Nominations for the leadership contest are expected to open on 9 July.
Speaking outside Downing Street, Starmer defended his time in office, highlighting what he described as the fastest reduction in NHS waiting lists in 17 years and the largest improvement in workers’ and renters’ rights “in a generation.”
Attention has quickly turned to Greater Manchester Mayor Andy Burnham, who is widely regarded as the leading candidate to succeed Starmer following his strong performance in the recent Makerfield by-election.
Investors Focus on Iran Talks Rather Than UK Politics
Despite the political developments, market reaction remained limited as investors continued to place greater emphasis on international developments, particularly negotiations between the United States and Iran.
According to Andreas Lipkow, chief market analyst at CMC Markets, investors were “continuing to place greater weight on developments in US-Iran negotiations than on domestic political noise. That suggests markets remain primarily focused on the outlook for energy prices and global risk sentiment rather than near-term uncertainty in Westminster.”
Diplomatic efforts involving mediators from Qatar and Pakistan reportedly made progress, including the establishment of a new High-Level Committee and a dedicated communication channel aimed at ensuring safe navigation through the Strait of Hormuz.
Although comments from U.S. President Donald Trump briefly disrupted discussions over the weekend, negotiations subsequently resumed. Analysts at Jefferies said they remain “optimistic that a deal will be reached,” even if the current 60-day truce period needs to be extended.
Oil Falls as Hormuz Concerns Ease
Oil prices moved lower as hopes for uninterrupted shipping through the Strait of Hormuz reduced geopolitical risk premiums.
WTI crude declined 0.70% to $75.32 per barrel, while Brent crude fell 1.64% to $78.72 per barrel.
Jefferies noted that as long as oil remains around the $75 level, “risk sentiment should remain well-supported,” adding that it has increased exposure to risk assets on expectations that the truce will continue.
Gold moved in the opposite direction, with investors continuing to seek exposure to safe-haven assets. Spot gold rose 0.80% to $4,193.38 an ounce, while gold futures advanced 0.92% to $4,217.82.
UK Corporate Round-Up
easyJet Rejects Third Takeover Proposal
easyJet (LSE:EZJ) rejected a third takeover approach from U.S. investment firm Castlelake, which valued the airline at 625 pence per share. The board concluded that the proposal did not adequately reflect the company’s value and future prospects.
Ocado Addresses Succession Speculation
Ocado Group (LSE:OCDO) confirmed that chief executive Tim Steiner and the board continue to undertake long-term succession planning and engage with potential candidates. The statement followed a media report suggesting that Vonage chief executive Niklas Heuveldop had been approached regarding the role.
Babcock Reports Profit Impact From Type 31 Charge
Babcock International (LSE:BAB) reported that annual underlying operating profit fell 19% to £293.3 million after the company recorded a £140 million charge related to its Type 31 frigate programme for the Royal Navy. Despite the impact, management maintained confidence in the group’s longer-term outlook, supported by strong demand across defence and nuclear markets.
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