Key events
UK gilt yields are also broadly unchanged, signalling investors have long expected this change at the top of UK government.
The yield on the benchmark 10-year UK gilt is up 1 basis point on the day at 4.85%, unchanged from where they were prior to the announcement.
Pound holds lower after Starmer confirms resignation
Markets appear to have broadly priced in Keir Starmer’s resignation, with the pound having moved little on the news.
Sterling has pared losses but is still in the red, down 0.2% at £1.32, though part of this is due to a rising US dollar which has gained ground on progress in the US-Iran peace talks.
Starmer has tried to lay out an orderly transition, saying he has asked the national executive of the Labour party to set out a transition timetable, with nominations for new leaders opening 9 July and completed by summer recess on 16 July.
He said that will ensure a new leader in place before parliament returns in September.
Starmer said he will remain in post as prime minister until the context is complete, and promised to give his “full and unequivocal support” to whoever takes his place.
Starmer confirms he is resigning
Prime minister Keir Starmer has taken the lectern outside Downing Street listing the progress made by Labour government, before confirmed he is resigning.
“Every decision I’ve taken has been about putting the country I love, first…that is why I will resign as leader of the Labour party.”
You can follow the play-by-play of Starmer’s resignation address in our Politics live blog here:
Pound near 2026 low as PM Keir Starmer expected to announce resignation timetable
Sterling is down, trading near its lowest level so far this year, as investors await news of prime minister Keir Starmer’s resignation timetable.
The pound is trading down by about 0.35% at 1.3191, with all eyes on how markets will react to news of what is expected to be a baton pass to Andy Burnham.
Eurozone bond yields have also dropped slightly, thanks in part to momentary relief over US-Iran peace talk progress, amid hopes it could ease geopolitical tensions and war-related inflation that reduce the prospect of further ECB rate rises.
The yield on Germany’s benchmark 10-year bond yield was down 2 basis points at 2.966% this morning. (This is after having climbed 6 basis points on Friday after peace talks were abruptly called off)
It also comes as ECB president Christine Lagarde is set to appear in front of European parliament’s committee on economic and monetary affairs in Brussels this afternoon, starting at 2pm BST.
Her comments will come after the ECB became the first big central bank to raise interest rates since the start of the Iran war, earlier this month.
While financial markets had been expecting two more ECB rate rises by next March, the weekend’s peace talks have tempered those forecasts.
Brent crude prices at lowest level since March
Oil prices are trading at their lowest level since March, though analysts say it may be too early to peg hopes on a sustained drop in energy prices despite progress in US-Iran peace talks this weekend.
Stephen Innes, an analyst with SPI Asset Management, says it is important “not to overcook Monday’s oil move” :
Brent shorts had built meaningfully last week, so part of the early upside looks like traders taking risk down rather than launching into a full-blown conflict trade.
When positioning has leaned too far into calm, it does not take much tension to force a little oxygen back into the price. That is less a declaration of war than a reminder that carrying shorts into a geopolitical negotiation is rarely a comfortable overnight position.
Patrick Wintour and Jonathan Yerushalmy
Iran’s foreign minister has declared “progress” after the first day of talks between high-ranking officials from Washington and Tehran ended in Switzerland, despite a tense opening marked by Donald Trump threats to restart attacks.
A joint statement from mediators Qatar and Pakistan said the US and Iran agreed to a roadmap towards a final deal within 60 days. Technical talks between lower-ranked officials will continue for the rest of the week, according to the statement, with fighting between Israel and Iran-backed Hezbollah in Lebanon at the top of the agenda.
“Pakistani and Qatari mediation has delivered major progress to end Lebanon war,” said Abbas Araghchi, the Iranian foreign minister, after talks broke up just after 3am local time (1am GMT).
The joint statement said the US and Iran agreed to establish a “communication line” to avoid incidents in the strait of Hormuz, and to set up a “deconfliction cell” with Lebanon’s government to ensure the “adherence of the termination of military operations in Lebanon”.
In a development that is critical to unlocking progress, the US Treasury was also preparing to issue a 60-day waiver lifting sanctions on oil, petrochemicals and derivatives. Iran said this meant its central bank would be able to sell oil to customers, principally China, and receive payments without the threat of sanctions.
Qatar and Iran also signed a memorandum about the release of Iranian assets frozen in Qatar bank accounts due to US secondary sanctions. It was not clear whether the US had placed any restrictions on Iran’s use of the assets, such as demanding the money only be spent on humanitarian goods.
The economic measures may help lift some of the pressure in Iran’s exchange markets, and gradually slow runaway inflation, the country’s biggest domestic concern at present.
Read more here:
European stocks are kicking off the week on a positive note, amid news of progress on US-Iran peace talks.
Here’s how they are looking at the start of trading:
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FTSE 100 is up 0.11%
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France’s CAC 40 is up 0.15%
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Spain’s IBEX is up 0.08%
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Germany’s Dax is up 0.22%
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Pan-European Stoxx 600 is up 0.11%
Introduction: Oil prices fall, stocks rise on reports of ‘progress’ in Iran-US peace talks
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Investors are pegging hopes on to reports of progress in the US-Iran peace talks, helping ease market jitters that have weighed on stocks and sent energy prices soaring.
A first round of talks between US and Iranian officials in Switzerland this weekend reportedly ended on a positive note, with the Iranian foreign ministry saying good progress had been made, according to Iran’s Press TV.
Officials from Qatar and Pakistan, who have been acting as mediators, also said the US and Iran had agreed a roadmap that would seal a final deal within 60 days.
That may feel like a long way off, but it has been enough to calm oil markets, sending Brent crude prices down more than 2% and below $80 a barrel, at $78.90, a significant drop from its May peak of $126.41.
The news has also lifted stock prices in Asia. The Japan’s Nikkei rose 1.8% this morning, while South Korea’s Kospi climbed 0.6% and the MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.8%. Chinese blue chips stocks rose 1.6%.
Ipek Ozkardeskaya, a senior analyst at Swissquote, says it’s a bit of relief after a weekend of uncertainty:
The week starts on a surprisingly positive note despite the uncertainty surrounding the US/Iran peace talks, which took several twists over the weekend.
On Friday, the talks were postponed (likely due to Israel’s renewed attack on Lebanon).
On Saturday, Iran announced that it would close the strait of Hormuz again.
Yet senior US and Iranian officials still met at Switzerland’s Bürgenstock resort on Sunday, to kick off the 60-day negotiation period.
They said the talks went well. Meanwhile, US President Trump continued to post threats on social media. And here we are, Monday morning.