So far this week, investor attention has been split between developments in UK politics, progress in Iran-related peace talks, and fresh news from the world’s largest technology firms.
On Monday, Prime Minister Sir Keir Starmer announced his resignation, stating that he would remain in office until a successor is selected in the coming months. Despite leading Labour to a landslide election victory in 2024, Starmer had increasingly faced questions over his leadership within the party. Attention has now turned to Andy Burnham, who is widely expected to enter the leadership race and is seen by many as the frontrunner. So how did markets react to the Prime Minister’s announcement? Likely underpinned by that investors still have little clarity on what policies a potential Burnham-led government might pursue, markets largely shrugged off the news. The widespread expectation that Starmer would step down after Labour suffering heavy losses in the latest local elections also appears to have helped limit any significant market reaction. In practical terms, the benchmark 10-year gilt yield edged higher to 4.85% following the announcement before easing back towards 4.80% later in the session. Meanwhile, the FTSE 100 closed up 0.72%, while the FTSE 250 finished broadly flat.
Also on Monday, US Vice President JD Vance stated that Iranian authorities have agreed to allow inspectors from the International Atomic Energy Agency to return to the country, a move aimed at reassuring Washington that Iran is not pursuing the development of a nuclear weapon. At the same time, reports suggest the US is considering a temporary easing of certain sanctions that have restricted Iran’s ability to trade crude oil and related products, with any relief expected to remain in place until August. The measures are being viewed as a potential confidence-building step as both sides seek to reduce tensions and re-establish a framework for dialogue. For energy markets, the prospect of additional Iranian oil reaching global markets could help alleviate supply concerns, although the extent of any impact will depend on the scope of sanctions relief and Iran’s ability to increase exports. Brent crude currently hovers around $74.94 per barrel, illustrating that concerns about supply disruption continue to ease.
Big Tech saw some modest pressure on Tuesday, leaving the major US indices slightly lower by the close and newly listed SpaceX experiencing a sharper move. The volatility appears to have followed a sell‑off in parts of the South Asian market, though without a clear catalyst. Noise in markets is unsettling, of course. However, it’s worth remembering that periods of market adjustment are common around index rebalancing, major IPO activity, and shifts in sector leadership, and they often settle once initial uncertainty passes. Recent moves also need to be viewed in context: while technology stocks have eased back, the pullback has been relatively contained following a strong run. The Nasdaq is about 5.5% below its early‑June high but remains up roughly 10% year‑to‑date, underscoring that the broader trend is still constructive rather than concerning.
Still to come this week the Federal Reserve’s preferred measure of inflation PCE, durable goods orders and University of Michigan consumer sentiment.
Nicola Tune, Portfolio Specialist