Market Update: 22nd June 2026 – One Risk Off, Another On?

Markets have spent most of June trading as though every headline carried the potential for catastrophe. Today, for once, they have been offered something different: the possibility that one of the world’s more combustible relationships might be cooling.

Reports overnight suggest meaningful progress towards a peace agreement between the US and Iran. Nothing is signed, sealed or framed on a diplomatic mantelpiece just yet, but the direction of travel appears constructive. For markets, that is often enough.

Oil promptly moved lower as traders began removing some of the geopolitical premium that had been generously added over recent weeks. Energy markets, much like insurance policies, tend to get more expensive when everyone suddenly remembers where the exits are.

The prospect of calmer waters in the Middle East matters because lower energy prices ease inflation concerns and makes life marginally easier for central banks that have spent the last two years trying to slow economies without breaking them.

Unfortunately, markets rarely get to enjoy one piece of good news without immediately being handed a fresh uncertainty.

Enter Westminster.

Sir Keir Starmer’s resignation as Prime Minister has injected a new dose of political risk into UK assets. Investors now face the familiar exercise of trying to work out whether a change in leadership means a change in policy, or simply a change in the name on the lectern.

Sterling may therefore find itself caught between improving global sentiment and growing domestic uncertainty. UK equities face a similar challenge. Markets can cope with bad news, and they can cope with good news. What they dislike is not knowing which one they are dealing with.

The next few weeks will revolve around three questions:

• Does progress between Washington and Tehran become a lasting agreement?

• Can lower oil prices be sustained?

• What direction does Britain’s next government choose to take?

For now, one geopolitical fire appears to be cooling just as another political bonfire is being lit closer to home.

In markets, risk never really disappears.

It simply changes postcode.

Anyway, till next time, all of you trade safe!

By James Trescothick
Head of Market Research and Market Analysis

Risk Disclaimer: This information is for educational purposes only and does not constitute investment advice. Financial markets involve risks, and past performance is not indicative of future results. Always conduct your own research and seek professional advice before making investment decisions.