Europe close: Markets rise on US-Iran tension, Starmer resignation

22nd Jun 2026 16:00

(Sharecast News) - European shares managed a positive close on Monday as investors monitored fragile US-Iran peace talks, ongoing Israeli attacks on Lebanon and the latest UK political turmoil following the resignation of prime minister Keir Starmer.

The pan-European Stoxx 600 rose 0.66% to 639.81.

Germany's DAX gained 0.66% to 25,151.48 and London's FTSE 100 advanced 0.72% to 10,437.85, while France's CAC 40 slipped 0.25% to 8,400.11.

In commodities, Brent crude futures were last down 3.85% on ICE at $77.47 per barrel, while the NYMEX quote for West Texas Intermediate dropped 2.61% to $74.60.

Chris Beauchamp, chief market analyst at IG, said Keir Starmer's departure had not held back the FTSE 100.

"Clearly prime ministerial resignations are good for the FTSE 100," he said.

"The index is enjoying that rarest of sessions at present, where it outperforms US tech stocks.

"This comes on a day when the pound continues to recover too, and while the FTSE 250 lags behind in the red, it has at least managed to trim its losses."

Beauchamp said the signs were now that Starmer's successor would be in power in less than a month, "which at least minimises the uncertainty for investors".

Iran's foreign minister said progress had been made after the first day of talks between Washington and Tehran in Switzerland, although tensions remained high after US president Donald Trump threatened to resume attacks and Iran said it was closing the Strait of Hormuz again.

A joint statement from mediators Qatar and Pakistan said the US and Iran had agreed on a roadmap for a final deal within two months.

Technical talks between lower-ranked officials are expected to continue for the rest of the week.

Beauchamp said oil prices had resumed their fall after signs of progress in the negotiations.

"Oil seemed to have bottomed out at least temporarily last week, as the fragile US-Iran deal threatened to collapse.

"Despite a stormy weekend of talks in Switzerland and threats from the White House, it seems some progress was actually made between the two sworn enemies."

"Compared to recent days, passage through Hormuz seems to have returned to a more reasonable level too, giving hope for consumers that petrol prices will continue to come down," he added.

In the UK, Starmer delivered a brief resignation statement outside 10 Downing Street, clearing the way for newly re-elected MP Andy Burnham to either take over or fight a leadership contest against former health minister Wes Streeting.

Danni Hewson, head of financial analysis at AJ Bell, said: "Today may have been hugely politically significant, but markets have taken Keir Starmer's resignation in their stride."

"Ever since the disastrous local election result for the government in May, markets have been weighing up the probability that a new prime minister could walk through the door to Number 10 and gradually pricing in what that might mean," she said.

Hewson said Burnham had been on "a charm offensive" to reassure bond markets as speculation mounted over his likely rise to the top job.

"The newly elected Makerfield MP and leadership hopeful has qualified previous comments and brought in some economic heavyweights to prepare him for what will be an incredibly difficult task ahead," she said.

"He has promised to finally deliver on the change enshrined in the Labour Party manifesto, but he will be shackled by many of the same issues that faced Keir Starmer and his team, not least the huge public sector debt pile and uncomfortably high interest payments."

However, Hewson said Burnham was entering the field at a potentially favourable moment, with the Middle East conflict edging towards a resolution and UK households potentially avoiding the worst of the price increases they had feared.

UK consumer sentiment still weak

On the economic front, UK consumer sentiment remained weak in June, according to S&P Global.

The UK consumer sentiment index was little changed from May, rising 0.1 points to 42.2, but remained well below the neutral 50 mark.

The household finance index improved to 40.0 from 38.9, although spending sentiment fell to 33.5 from 34.1.

Confidence around major purchases dropped to a 35-month low of 29.4 from 30.9, while labour market sentiment fell to 48.9 from 50.5, its weakest level since March 2023.

Measures of job security, activity at work and employment income all deteriorated over the month, while the rate of savings reduction was the second-fastest in 28 months.

Maryam Balauch, economist at S&P Global Market Intelligence, said uncertainty remained "stark" across households, with workers reporting the greatest level of job insecurity in more than three years.

She said households were also taking a wait-and-see approach to major purchases until the economic outlook became clearer, while expectations for Bank of England policy leaned more hawkish.

Hewson said it was notable that the FTSE 250 had failed to match the positivity in the FTSE 100.

"This suggests investors are wary about the future and unhappy about a summer in which the day-to-day business of getting stuff done is likely to be put on pause," she said.

In China, the People's Bank of China left benchmark lending rates at record lows, keeping the one-year loan prime rate at 3.0% and the five-year rate at 3.5% for a 13th consecutive month.

The decision reflected a cautious policy stance amid Middle East tensions and mixed domestic data, with retail sales unexpectedly falling in May, house prices continuing to decline and loan growth remaining weaker than a year earlier, even as industrial output growth accelerated.

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Hewson said that as optimistic noises followed the latest US-Iran peace talks, defence stocks fell and banks rose "in a now familiar dance which could be reversed if those same talks hit any setbacks".

Reporting by Josh White for Sharecast.com.