(June 22): US stock futures fell and oil climbed as talks between Washington and Tehran were clouded by a renewed threat from President Donald Trump to strike Iran. The pound slipped on speculation around Keir Starmer’s future as UK prime minister.
S&P 500 contracts edged lower in early Asia trading after US markets were closed Friday for a holiday. Brent crude opened more than 2% higher. The dollar edged up against most major peers, while sterling dropped 0.2%.
The US and Iran held talks in Switzerland on a peace deal to settle the issue of the Islamic Republic’s nuclear programme and permanently reopen the Strait of Hormuz. As the meetings got underway, Trump once again threatened strikes if Hezbollah keeps attacking Israel.
The developments are a further test to the optimism that’s seen a tech-led rally in stocks gain further momentum after the US and Iran lifted a months-long dual blockade of the Strait of Hormuz. Despite the war, global stocks have gained 15% so far in the second quarter, on track for the biggest quarterly rise in six years.
“A potential unravelling of the US-Iran memorandum of understanding, which remains incredibly fragile given the events over the weekend” is one of the biggest risks to stock gains, Tony Sycamore, an analyst at IG in Sydney, wrote in a note to clients.
Traders in Asia Monday will be focused on China’s commercial bank lending rates as the economy shows signs of stalling. The loan prime rates are likely to remain unchanged, as buffers from strong exports and the AI boom may reduce the urgency to step up support for the economy, according to Bloomberg Economics.
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Meantime, the pound slid toward a fresh low for the year as Starmer is expected to set out a timetable for his departure as PM in the coming days, and may concede power as soon as Monday, people familiar with the matter said, though they cautioned that was not certain. Starmer spent the last three days considering his position and whether he should continue to fight attempts by Greater Manchester Mayor Andy Burnham, who was elected to Parliament last week, to depose him.
Trump said in a post on Truth Social on Sunday that Starmer was to resign. A UK official said that nothing had been communicated to Trump from the government and he had not spoken to Starmer.
The question for investors is the impact on UK’s finances if Burnham becomes prime minister. He has so far offered little clarity on the potential policies he’d pursue, making it difficult to gauge the ramifications for future borrowing. Markets are nervous about any potential to ramp up bond sales to fund spending, given the UK is already struggling with its debt pile.
Uploaded by Isabelle Francis
