The FTSE 100 moved higher on Monday, closing up 0.7% at 10,437.85 as investors balanced a sudden change at the top of UK government with signs that US–Iran negotiations were edging forward, while oil eased and banks in London did much of the heavy lifting for the index.
The main domestic driver came from the announcement that Keir Starmer would step down after sustained internal pressure within Labour, with the outgoing prime minister acknowledging he had lost backing from MPs only two years after a sweeping election win.
The party has now set a timetable that opens nominations on 9 July and closes them on 16 July, leaving a short runway for a replacement to emerge.
Attention quickly shifted to the succession race, where Andy Burnham has emerged as the front runner following his recent Makerfield by-election victory, with the possibility of taking office within days of the nomination process closing if unchallenged.
Deutsche Bank analysts flagged that markets are likely to concentrate less on the identity of the next prime minister and more on the chancellor appointment, with Streeting viewed as one of the more market-friendly figures.
Internationally, risk appetite was steadied by developments in the Middle East after US and Iranian officials signalled progress in talks held in Switzerland, with US Vice President JD Vance describing the outcome as a “very good foundation” for further negotiations.
The tone contrasted with earlier concerns around escalation and helped ease pressure in energy markets as Brent crude slipped to $77.38 a barrel from $80.21 at the end of last week.
That easing in oil fed through into global equities, with European indices finishing mixed as Paris’s CAC 40 slipped 0.3% while Frankfurt’s DAX 40 added 0.6%.
In the US, trading saw a split session where the Dow Jones edged higher but the S&P 500 fell and the Nasdaq dropped sharply as technology shares came under sustained selling pressure, with Alphabet leading declines alongside moves lower in Amazon, Meta and Nvidia.
London’s session was driven by banks, with NatWest rising 4.0% and both Lloyds Banking Group and Barclays advancing close to 3.9%, while defence contractor Babcock International fell 5.9% after a weaker update and a £140m charge linked to its Type 31 frigate programme weighed on earnings visibility.
Among mid-cap names, easyJet rose after rejecting multiple takeover approaches from Castlelake, pushing back on valuations it described as opportunistic despite bids reaching £4.74bn.
Ocado slipped on reports of an impending leadership change around chief executive Tim Steiner, and IP Group edged higher after receiving a takeover approach from Railpen valuing the business at 69.7p per share.