SYDNEY/LONDON, June 22 : European stocks and U.S. futures steadied while oil prices dipped on Monday after mediators said progress had been made in U.S.-Iran peace talks, helping calm fears the fragile process to end the war was breaking down.Meanwhile, the pound and UK bonds rose after Prime Minister Keir Starmer announced his resignation, paving the way for Britain's seventh leader in 10 years.The Iran war talks had earlier been overshadowed by Tehran's announcement it had again closed the Strait of Hormuz, prompting U.S. President Donald Trump to threaten fresh attacks.But officials from Qatar and Pakistan said progress was made on a roadmap to reach a final deal in 60 days. That was backed up by U.S. Vice President JD Vance, who said Tehran had agreed to allow nuclear inspections.
The apparent progress in discussions saw Brent crude futures shed early gains to ease 1.8 per cent to $79.07 a barrel, far below its May peak of $126.41.Europe's STOXX 600 index wavered and was last up 0.15 per cent, while U.S. S&P 500 futures pared early losses to trade 0.1 per cent lower."There does appear to be further progress being made during talks in Switzerland towards a lasting settlement, and oil prices have dipped again," Susannah Streeter, chief investment strategist at Wealth Club, said of the Iran talks."It is clear there is still a long way to go, and more obstacles may emerge before a long-term deal is signed."Asian stocks climbed overnight, supported by the apparent progress in peace talks. Japan's Nikkei rose 1.6 per cent, while South Korea's red-hot market added 0.7 per cent, after surging more than 11 per cent last week on demand for semiconductor stocks.STARMER RESIGNATION CLOUDS UK OUTLOOKThe pound reversed earlier losses to trade flat at $1.324 while gilts rose on Monday after Starmer announced his resignation, which had been widely rumoured over the weekend.Former Manchester Mayor Andy Burnham is the favourite to succeed Starmer, but investors said a key question for nervy UK bond markets would be who becomes finance minister.“A new leader does not fundamentally alter the difficult fiscal situation they’re going to inherit," said Nick Rees, head of macro research at Monex Europe. The euro eased 0.15 per cent to $1.146, after hitting a three-month low on Friday at $1.1418. Treasuries remained under pressure following a hawkish turn by the Federal Reserve last week that led markets to price in a 75 per cent chance of a rate hike as early as September. Futures imply around 38 basis points of tightening by year-end, while yields on 2-year notes rose as much as 4 basis points to the highest since early 2025 at 4.230 per cent."Our baseline call is for patience and a first hike in the second half of 2027, but (we) believe the margin for error and the tolerance for further inflation is limited, with genuine risks of earlier hikes," said Fabio Bassi, head of cross-asset strategy at JPMorgan.The Fed's hawkish outlook helped push the dollar up 0.3 per cent to 161.71 yen, with only the threat of Japanese intervention preventing the currency rising to 2024's 40-year high of 161.96.
