UK Shares Close Higher Amid Prime Minister's Resignation; Babcock Falls
London's FTSE 100 closed 0.72% in the green on Monday as markets prepare for a busy week of economic and private sector data releases while assessing the latest geopolitical developments at home and abroad.Keir Starmer will resign as prime minister of the UK and as leader of the Labour Party. He will remain in office until the party chooses a new leader, which is expected to take place by the time parliament returns in September. Following the announcement, former Greater Manchester mayor Andy Burnham confirmed that he will seek to replace Starmer as Labour leader and prime minister."Our short-term fair value model shows no overvaluation in EUR/GBP, suggesting no political risk premium. That is good and bad news for GBP. It signals that markets are relaxed about this government change, but that means a greater downside for the pound should fiscal concerns resurface," ING analysts said.Meanwhile, the US and Iran concluded the first high-level peace deal talks in Switzerland with "encouraging progress," mediators Pakistan and Qatar said in a joint statement.Separately, a survey from S&P Global showed UK consumer sentiment remained subdued in June 2026, with the Consumer Sentiment Index edging up to 42.2 from 42.1 in the previous month. S&P said the second quarter of 2026 was the weakest for household confidence since the third quarter of 2023, reflecting softer views on the labor market and household spending.In corporate news, Babcock International Group (BAB.L) was the blue-chip index's top faller, losing 5.89% at closing, after booking a year-over-year drop in fiscal 2026 statutory profit after tax to 210.7 million pounds sterling from 248.9 million pounds. The British aerospace and defense company's revenue, on the other hand, rose to 5.18 billion pounds from 4.83 billion pounds on the back of "strong" growth at its nuclear and aviation segments.Berenberg left its hold rating and 22.80-pound price target for Whitbread (WTB.L) unchanged amid a continued "cautious" outlook on the Premier Inn hotel owner despite a better-than-expected revenue per available room in the UK for its fiscal first quarter. The stock closed the session 3.40% higher."This drives small increases to our estimates. German growth was slightly softer than we expected; however, given that it tends to be an events-driven market, this is unsurprising, and we leave our German estimates unchanged," the research firm said in a note. "Overall, we see no reason to move from our Hold recommendation. The company's back-end-weighted five-year plan limits near-term shareholder returns and an uncertain outlook keeps us firmly on the sidelines."
