Despite Drop in Oil Due to US-Iran talks, Stocks Dip – Europe Market Wrap
US equity futures edged lower after the long weekend, with lower oil prices providing only limited support as investors balanced improving geopolitical developments against a still-hawkish interest-rate backdrop.
S&P 500 futures slipped 0.2%, while the Dollar strengthened 0.1%. Treasury yields moved higher across the curve as cash trading resumed following Friday’s US holiday. Brent crude fell 1.6% toward $79/bbl after US and Iranian negotiators agreed on a roadmap toward a final agreement, reinforcing expectations that supply disruptions through the Strait of Hormuz will continue to ease.
Markets also focused on political developments in the UK after Starmer announced his resignation outside 10 Downing Street. Sterling initially fell to a fresh 2026 low before recovering, while gilts rallied as investors took comfort from the prospect of an orderly leadership transition.
Starmer’s departure sets Britain on course for its seventh prime minister in a decade and opens the door for Burnham to become the next Labour leader. Burnham announced his candidacy shortly after the resignation and secured support from Streeting, who had been viewed as a potential challenger.
Labour leadership nominations will open on July 9th, with the contest scheduled to conclude by September 1st. Investors are now assessing the potential implications for UK fiscal policy, particularly whether a Burnham government would pursue a more expansionary spending agenda, a key consideration for gilt markets and the broader outlook for UK assets.
