Following a long weekend, **US stock markets** anticipate a subdued opening, as **equities** struggle to find momentum despite declining **oil prices** and emerging signs of **diplomatic progress between the US and Iran**.
Initial trading saw **S&P 500 futures** dip by 0.1%. **Brent crude oil** futures notably declined by 1.9%, approaching $79 per barrel, fueled by Vice President JD Vance’s comments on significant advancements in **US-Iran negotiations**. Meanwhile, **Treasuries** experienced a broad decline after Friday’s market holiday, and the **US dollar** saw a modest 0.1% uptick.
Market participants also closely monitored significant developments in **UK politics** as **Prime Minister Keir Starmer announced his resignation** from outside 10 Downing Street. Initially, the **British pound** briefly touched a 2026 low before recovering losses, while **UK gilts** rallied amid indications of an orderly **leadership transition**.
**Oil traders** found reassurance in tangible progress reported from **Middle East talks**, even as President Donald Trump issued a warning of potential strikes against **Iran** should **Hezbollah militants** persist in attacking Israel. Vice President Vance confirmed that a mechanism has been established to maintain open passage through the **Strait of Hormuz**, and Iran has reportedly agreed to welcome **nuclear inspectors**.
Stephan Kemper, chief investment strategist at BNP Paribas Wealth Management, noted that “even amid the ongoing **Middle East conflict**, **equities** had already factored in a positive resolution.” He added, “It’s therefore logical that **markets** wouldn’t experience a substantial rally on an outcome that has largely been anticipated and **priced in**.”
Back in the **UK**, **Starmer’s departure** signals Britain’s seventh prime minister in a decade, potentially clearing the path for **Andy Burnham** to take the helm. The former **Mayor of Manchester** swiftly declared his candidacy mere hours after **Starmer’s resignation**, garnering support from potential rival Wes Streeting.
**Starmer** confirmed that nominations for the new **Labour leader** will commence on July 9, with the **leadership contest** concluding by September 1. A key concern for **investors** revolves around the potential impact on **UK public finances** should **Andy Burnham become prime minister**.
Mohit Kumar, an analyst at Jefferies, stated, “**Markets** will be keenly observing **Burnham’s choice for Chancellor**.” He elaborated, “Concerns arise from the perception of Burnham’s potentially **left-leaning policies**; if the new Chancellor lacks credibility, it could trigger alarms regarding increasing **deficits and national borrowing**.”
In corporate news, **SpaceX shares** plummeted over 5% in **premarket trading**, setting the company on track for its third consecutive daily loss. Conversely, **chipmakers**, including **Intel Corp.**, experienced a rally. **Getty Images Holdings Inc.** saw an astonishing surge of over 300% following its announced **display partnership** with **ChatGPT owner OpenAI**.
**Bond traders**, who have recently adjusted positions in anticipation of potentially **higher interest rates**, are now focused on Thursday’s release of the **US Personal Consumption Expenditures (PCE) price index**. This key economic data will provide crucial insights into whether the **market’s hawkish outlook** on interest rates is justified.
**Forecasters** widely anticipate that the **PCE index**, recognized as the **Federal Reserve’s preferred inflation gauge**, will indicate an acceleration in inflation for May, both on a monthly and year-over-year basis. Further insights into monetary policy may come from **Fed Governor Christopher Waller**, who is scheduled to speak later on Monday. (Bloomberg)
