Closing post
Time to wrap up.
It’s been a busy day for markets, starting off with reaction to news of progress on a US-Iran peace deal, with officials from the two countries having agreed to a roadmap towards a final agreement within 60 days
The update helped bring down Brent crude oil prices below $80 per barrel, and lifted stocks in Asia.
But that news was quickly overshadowed as Keir Starmer confirmed he would be resigning as UK prime minister, opening the floor to a leadership race that would bring a new face into Number 10 Downing Street by September.
Financial markets took the news in stride, having broadly priced in his departure.
Despite ongoing handwringing over how investors would react, the pound pared its losses to trade flat on the day, alongside the domestically focused-FTSE 250.
The FTSE 100 meanwhile bounced into positive territory to trade 0.5% higher.
UK gilt prices also benefited, with yields dropping in response to the resignation as well as the prospect of an easing of international geopolitical tensions and inflation.
News later emerged that Alan Greenspan, the longtime former head of the US Federal Reserve, had died at 100.
Here are today’s other main stories:
We’ll be back tomorrow.
Updated
US stock markets are open for trading but are relatively muted as investors digest the weekend’s news, including the implications of reported progress in US-Iran peace talks.
-
The Dow Jones Industrial Average fell 9.5 points, or 0.02%, at the open to 51,555.19
-
The S&P 500 fell 0.1 points, or 0.00%, to 7,500.44
-
The Nasdaq Composite dropped 34.6 points, or 0.13%, to 26,483.31
Lloyds Banking Group is considering a bid for specialist lender Aldermore, according to Sky News, in what analysts say could amount to a £1.3bn takeover.
Lloyds is said to be examining a takeover of the South African-owned bank Aldermore because of its small business lending and project finance capabilities, according to City sources cited by Sky.
RBC banks analyst Benjamin Toms has said that Aldermore could come with a £1.35bn price tag, but said:
It is difficult to see the longer-term strategic attractiveness for LLOY vs alternative opportunities in the wealth space.
Toms added:
Aldermore would represent an enhancement of scale rather than capability, in our view. The bank would generate synergies largely driven by lower funding costs, as Aldermore currently does not have current accounts.
However, the acquisition would not help LLOY diversify its revenue away from net interest income.
We would prefer to see LLOY carry out M&A in the wealth space, given how under-penetrated the bank is in this area.
The South African group FirstRand, announced it would be selling its UK operations – trading as Aldermore and motor lender MotoNovo – in April amid frustration over the FCA’s motor finance scandal compensation scheme, which it said was “deeply flawed”.
Aldermore, which employs 1,500 staff across offices in London, Reading, Manchester and Cardiff, said at the time that while “the group has done everything in its power to protect shareholders from a redress scheme that it considers deeply flawed,” it would now be looking to “facilitate an orderly ownership transition” of its Aldermore business.
The domestically-focused FTSE 250 mid-cap index has also pared its losses, having been trading down by 0.47% at around 9:30am this morning.
Now, the FTSE 250 is now flat, trading down just 0.01% at 23,196 points.
UK stocks are faring relatively well, with the FTSE 100 having rebounded from a dip of 0.1% after Starmer’s resignation, to trade higher by 0.55%.
UK banks are making some of the biggest gains, in what could be a minor relief rally linked not only to the lessening of political certainty in Downing Street, but also the prospect of a US-Iran peace deal following this weekend’s negotiations.
NatWest is up 3.36%, while Lloyds is up 3%, and Barclays is up 2.5%.
Babcock, one of the UK’s biggest defence contractors, is the biggest faller by a long-shot, down 6.3%.
It comes after Babcock announced a 19% fall in full-year underlying operating profits, blaming Brexit and Covid among a catalogue of problems to beset an important contract for the Royal Navy. It took a £140m charge on that contract, which involved building five Type 31 frigates.
For a lighter history, Reuters is running interesting list of seven facts about the late Alan Greenspan:
-
Greenspan grew up a Benny Goodman fan and before taking up economics he studied clarinet for two years at New York’s Juilliard School and played saxophone with a touring jazz band.
-
Greenspan and NBC News correspondent Andrea Mitchell dated for 12 years before marrying in 1997.
-
Greenspan was notorious for speaking cryptically and once said, “I guess I should warn you, if I turn out to be particularly clear, you’ve probably misunderstood what I said.”
-
His first wife introduced Greenspan to Ayn Rand, the “Atlas Shrugged” novelist known for her philosophy of individualism, and they became close friends.
-
The bathtub served as Greenspan’s auxiliary office. He said it was during his daily morning baths, which sometimes lasted two hours, that he had his best ideas, using the tub time to read reports and write speeches. “Immersed in my bath, I’m as happy as Archimedes as I contemplate the world,” he wrote in his memoir.
-
After he retired from the Federal Reserve, Penguin Press paid $8.5m for his memoir, which at the time was the second-largest advance paid for a non-fiction book.
-
In his last year at the Fed, Greenspan had a salary of about $180,000.
Updated
Alan Greenspan was a towering figure in global economics, having overseen the second-longest economic expansion in US history, between March 1991 to March 2001, Reuters reports.
His judgement that productivity would keep inflation contained – and shrugging off pressure to hike rates – earned him rock star status among successors including Jerome Powell, who said Greenspan showed that judgement can outperform technical models of the economy.
However, Greenspan’s reputation was thrown into question by critics who said it fuelled a series of asset price bubbles and created the conditions that led to the 2007-2009 financial crisis.
Breaking: Former Fed chair Alan Greenspan dies at 100
Alan Greenspan, the influential economist who served five terms as chairman of the US Federal Reserve under four American presidents, has died at 100.
Greenspan’s wife, NBC News correspondent Andrea Mitchell, said he died from complications of Parkinson’s disease.
Greenspan chaired the Federal Reserve from 1987 to 2006, serving under the presidencies of Ronald Reagan, George HW Bush, Bill Clinton and George W Bush.
More to come here:
The Confederation of British Industry (CBI) lobby group says businesses need reassurance that that there won’t be further “drift or delay” to key government projects, including defence spending and closer ties with the EU.
CBI CEO Rain Newton-Smith says:
There are big decisions that need to be taken, whether that’s on the Defence Investment Plan, infrastructure projects, energy price caps or the UK-EU reset.
These are long‑term commitments and businesses need to know that there is not going to be further drift or delay. Business will want their voice to be heard and for the needs of our economy, the ability to invest and create jobs throughout the UK, to be at the forefront of any decisions.
It’s a competitive game to capture global investment and one in which the UK needs to stay ahead.
Business reaction is starting to trickle in, with Make UK, which represents the manufacturing industry, getting in early with demands for the next prime minister.
The lobby group’s CEO Stephen Phipson said:
With yet another change of prime minister the last thing business will want is a protracted summer of political infighting and internal navel gazing when we are at such a critical time for the economy and, there are so many big ticket issues to address.
It’s a long list involving: cutting the cost of industrial energy, opening up the North Sea, providing incentives for renewables, cutting the welfare bill, committing to a “fully funded” defence investment plan.
Phipson added:
The new prime minister must also seriously rethink the additional employment burdens and costs which have been imposed on business and led to the shameful number of young people not in education, employment and training.
At the very least, some of these more onerous measures should be pushed back.
Manufacturers stand ready to work with the new administration to bring the positive growth to the economy we urgently need to see.
UK 10-year gilt yield edges lower as Wes Streeting backs Burnham for prime minister
Markets are reacting positively t the prospect of an unopposed leadership contest, after Wes Streeting said he was backing Andy Burnham as the next Labour leaders and prime minister.
The yield on the benchmark 10-year gilt is down 0.02% at 4.82%
The pound has also edged into positive territory, up 0.06% to £1.324.
In a letter posted on X, Wes Streeting said he has “spoken at length with Andy in recent days” and was convinced there was a place for a raft of ideas he has to “change our country”, having listed out plans for energy security, a special relationship with Europe.
Streeting added:
We could spend the summer exaggerating small differences, or we can roll up our sleeves and help him deliver the change our party and our country needs. that is the choice that I am making and I hope that everyone else will back Andy too.
Markets shrug off news of Starmer's long-anticipated resignation
While markets have largely shrugged off the news of Starmer’s widely expected resignation, ths may not last if there is a more expansive fiscal policy by the next Labour prime minister.
This is why the next leader’s choice of chancellor is key, according Capital Economics deputy chief UK economist Ruth Gregory.
Gregory says:
Those on the “soft left” of the Labour Party (Miliband, Haigh) may be more inclined to raise spending and borrowing than those on the “soft right”, who would probably offset any spending rises with spending cuts elsewhere or tax hikes (Streeting, Mahmood, Cooper, McFadden).
Meanwhile, we doubt a new top team would be successful at boosting medium-term economic growth. Other things equal, looser fiscal policy could have a near-term positive effect on GDP.
But that boost is unlikely to be big if it is partly driven by higher defence spending (a lot of the UK’s defence spending goes on imports) and could be partly or wholly offset should higher taxes decrease confidence and/or raise gilt yields.
The fiscal constraint will be the same, making it hard to boost GDP growth in the medium term.
Updated
The pound has started to pare some losses, and is now trading just 0.08% lower at £1.322.
It comes as Starmer ending months of uncertainty over whether he would stay in post, which has weighed on UK markets.
Markets seem to be appeased by news of a (relatively) standard leadership contest, which will shake out any policy positions from prospective prime minister before they take post.
That could help reduce any jitters from some corners of the market over Andy Burnham’s potential leadership. according to Richard Carter, head of fixed interest research at Quilter Cheviot.
Carter says:
Markets are wary of Burnham’s previous policy positions so they would prefer to see ideas for governing fleshed out via a leadership contest, keeping surprises to a minimum.
There are difficult decisions around welfare and defence spending lurking, with each likely to have an impact on gilts and wider UK markets.
For now, given the economic team Burham has been putting in place, alongside the fact he does not appear to be seeking a new mandate, we are probably going to see more of a continuation of the current direction from the government.
Cabinet appointees will likely be scrutinised, however, for their growth friendly credentials.
Last week’s borrowing figures highlight just how messy this inheritance will be, and as such, there is unlikely to be any immediate silver bullet to the UK’s economic woes.
Without that new mandate, there is likely to be more tinkering with personal taxation around the edges and as such that will weigh on growth.
Updated
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.
Updated
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.
Updated
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:
Updated
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:
-
FTSE 100 is up 0.11%
-
France’s CAC 40 is up 0.15%
-
Spain’s IBEX is up 0.08%
-
Germany’s Dax is up 0.22%
-
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.
The agenda
-
2pm BST: ECB President Christine Lagarde appears before the European parliament’s economic and monetary affairs commottee
Updated
