London, June 22, 2026, 18:06 BST
- FTSE 100 rose 74.58 points to 10,437.85 on the session. FTSE 250 was down 3.72 points at 23,197.01.
- Banks led gains, with NatWest, Barclays and Lloyds all up around 3.9%.
- Banks are rallying as bond yields drop, hinting at relief over political and refinancing risks instead of a broad upgrade to Britain’s growth outlook.
FTSE 100 (UKX) climbed 0.72% to 10,437.85 on Monday as shares in banks, miners, and airlines rose after Prime Minister Keir Starmer said he will step down. Defence names lagged. The blue-chip index broke a two-day losing streak. FTSE 250 (MCX) ended nearly flat at 23,197.01.
FTSE 250 lags headline rally. The mid-cap index is exposed to the UK economy and didn’t pick up with large caps, keeping a 0.74 percentage-point gap with the FTSE 100. That left Monday’s gain looking like a focused relief move in banks and international stocks rather than a broad re-rating of UK growth hopes.
Some investors saw relief as the leadership shift looked set to move fast. Andy Burnham is the expected pick and Wes Streeting threw his support behind him instead of running himself. “The timetable minimises the uncertainty for investors,” said Chris Beauchamp, chief market analyst at IG. FXStreet
Bonds gave a less obvious read. Shares in NatWest, Barclays and Lloyds went up while the 10-year gilt yield dropped about three basis points to 4.81%. One basis point is one-hundredth of a percentage point. Usually, falling long-term yields point to tighter lending spreads. The move Monday, with banks rising and yields falling, points to investors cutting back the risk premium tied to political turmoil and a sudden spike in UK borrowing costs.
Geopolitics was a factor too. Brent crude slid under $80 a barrel after talk of US-Iran progress, which took some pressure off fuel costs and fears of another energy shock. The STOXX 600 added 0.6%. European banks climbed 1.4%. Traders said London’s move owed a lot to a wider regional risk-on shift, not just UK politics.
FTSE 250 ended flat. Michael Field, chief markets strategist for Europe at Morningstar, said a more popular candidate like Burnham “would likely improve market perception of the UK from an investment perspective.” But so far, equity investors aren’t betting that optimism will spread to the broader domestic economy. Morningstar
The June FTSE reshuffle went into effect Monday, after Aberdeen Group, Computacenter and Investec took spots in the FTSE 100 at Friday’s close. They replaced Berkeley Group, Mondi and Rightmove. Most of the index-tracking flows hit ahead of the session, as usual, so the new line-up changed the FTSE 100 but didn’t drive the day’s jump in bank shares.
easyJet added 2.8% after the airline said it had turned down three offers from Castlelake, the last one valuing easyJet at around £4.74 billion. Babcock International slipped 5.9% after results showed a £140 million charge tied to the Type 31 frigate project. JPMorgan’s David Perry said a new prime minister “could delay some contract awards,” but called it a timing issue. MarketScreener
Still, there’s a risk under the surface. A chancellor who relaxes fiscal rules could spark higher gilt yields and more swings in sterling, while renewed trouble in the Middle East could lift oil and bring back inflation fears. “The new PM’s choice of Chancellor matters,” said Ruth Gregory, deputy chief UK economist at Capital Economics. Commerzbank strategists said the chance of looser fiscal policy may not be fully built in. Reuters
