The FTSE 100 (^FTSE) saw a slight dip on Tuesday morning, with European stock indices showing mixed results shortly after the market opened in London. This came as Keir Starmer, the UK’s Labour leader, navigated the most significant political crisis of his leadership to date.
Starmer’s recent appointment of Peter Mandelson as the UK’s ambassador to the US has sparked considerable backlash from his own MPs. This controversy has grown over the past few weeks, especially in light of Mandelson’s connections to Jeffrey Epstein, the financier with a history of criminal activities who passed away in 2019.
These concerns gained momentum following the release of millions of pages from the Epstein files. Among the documents were revelations that Mandelson, while serving as a close advisor to then-Prime Minister Gordon Brown, allegedly passed sensitive, market-moving information to Epstein. The documents also highlighted payments from Epstein to Mandelson and his partner.
In response to mounting pressure, two key members of Starmer’s inner circle, communications director Tim Allan and chief of staff Morgan McSweeney, resigned in the past few days, paving the way for new leadership within Starmer’s team. McSweeney, in particular, took responsibility for the controversial appointment of Mandelson.
Despite the growing political storm, Starmer remained defiant. In a speech to MPs on Monday night, he asserted, “Every fight I’ve been in, I have won,” emphasizing that he had no intention of stepping down.
These political developments have had an impact on the bond market, with prices fluctuating in response. On Monday, bond prices briefly rose, only to dip again after cabinet members expressed public support for Starmer.
Market Update
As markets opened, the FTSE 100 fell by 0.1%. However, Coca-Cola (CCH.L) saw a gain as investors anticipated strong earnings reports.
Meanwhile, the more UK-focused FTSE 250 (^FTMC) edged 0.3% higher.
Across the continent, Germany’s DAX (^GDAXI) slipped by 0.2%, following a strong 1% rally the previous day, while France’s CAC 40 (^FCHI) gained 0.4%.
The pan-European STOXX 600 (^STOXX) remained largely unchanged.
The British pound (GBPUSD=X) weakened slightly against the dollar, dipping below the $1.37 mark.
