London stocks are set for a weaker open on Tuesday as investors digest the latest developments following US-Iran peace talks, political uncertainty in the UK following Sir Keir Starmer’s resignation, and a busy day of economic data.
Futures indicate the FTSE 100 will open around 105 points lower, or 1.0%, after the index gained 0.7% on Monday to close at 10,437.85.
Attention remains focused on the Middle East after Iran’s chief negotiator, Mohammad Bagher Ghalibaf, declared that the Strait of Hormuz will be administered by Tehran following negotiations in Switzerland. While describing the talks as having delivered “good achievements”, the comments are likely to keep geopolitical tensions firmly on investors’ radar given the strategic importance of the shipping route to global energy markets.
In the UK, markets continue to assess the political landscape after Starmer’s resignation. Former Greater Manchester mayor Andy Burnham is expected to strengthen his economic credentials in the coming days by reaffirming Labour’s commitment to fiscal discipline and existing budget rules ahead of a likely leadership bid.
Speculation is also mounting over the composition of a future Cabinet, with reports suggesting Energy Secretary Ed Miliband and Home Secretary Shabana Mahmood could be considered for senior economic roles should Burnham enter Downing Street.
Currency markets were relatively subdued, with sterling edging lower against both the US dollar and euro, while UK 10-year gilt yields held steady at 4.81%.
Global markets were weaker overnight. On Wall Street, the Dow Jones rose 0.3%, but technology stocks dragged the broader market lower, leaving the S&P 500 down 0.4% and the Nasdaq falling 1.3%.
Asian markets followed suit, with Japan’s Nikkei 225 dropping 2.5%, Hong Kong’s Hang Seng losing 1.6% and China’s Shanghai Composite falling 0.8%.
Commodity prices also softened. Brent crude slipped to $76.94 per barrel, while gold eased to $4,119.90 an ounce as investors weighed the implications of the ongoing diplomatic developments.
