* S&P 500 and EU stocks futures slip, Nikkei edges up
* Oil climbs as Iran claims it has shut Strait of Hormuz
* Treasury yields rise, Fed futures wager on September hike
* Sterling soft on reports UK PM Starmer may resign
By Wayne Cole
SYDNEY, June 22 (Reuters) - Most share markets slipped in
Asia on Monday as doubts about the Middle East peace process
sent oil prices and bond yields up again, leading investors to
price in more risk of higher U.S. interest rates.
Sterling eased amid reports Prime Minister Keir Starmer was
considering his political future, after rival Andy Burnham's
decisive election victory to parliament prompted more ministers
in the governing Labour Party to call for him to go.
U.S. President Donald Trump posted that Starmer was set to
resign, while also threatening fresh attacks on Iran even as
Vice President JD Vance met Iranian officials for the first
talks under an interim peace deal.
The talks were overshadowed by Tehran's announcement it had
again closed the Strait of Hormuz, with tracking sites showing
fewer vessels transiting after 32 ships made the passage on
Friday and 26 on Saturday.
Iran's threats were enough to push Brent crude
futures up 1.1% to $81.43 a barrel, still far away from its May
peak of $126.41. U.S. crude firmed 2.7% to $78.70 a
barrel, but remained above the $67 level it traded at before the
war began.
S&P 500 futures eased 0.5%, while Nasdaq futures
lost 0.7%. In Europe, EUROSTOXX 50 futures fell
0.5%, while DAX futures dropped 0.3% and FTSE futures
dipped 0.1%.
Japan's Nikkei edged up 0.7%, having climbed almost
8% last week to all-time highs. South Korea's red-hot market
fell 0.9%, after surging more than 11% last week on
demand for semiconductor stocks.
MSCI's broadest index of Asia-Pacific shares outside Japan
eased 0.4%.
MARKET NARROWS ODDS ON FED HIKE
Treasuries remained under pressure following a hawkish turn
by the Federal Reserve last week that led markets to price in a
75% chance of a rate hike as early as September.
Futures imply 38 basis points of tightening by year-end,
while yields on 2-year notes rose 4 basis points to
the highest since early 2025 at 4.2276%.
"Our baseline call is for patience and a first hike in the
second half of 2027, but 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.
"We remain constructive on risk assets as improving labour
markets will keep rates higher for longer, supporting a narrow
leadership in Quality Growth, Large Cap and Tech," he added. "We
see upside risks for the S&P target tilted towards 8,000."
The Fed's favoured gauge of core inflation is due on
Thursday and is forecast to rise a tick to 3.4% in May,
underlining the risk of tighter policy.
Central bank speakers include Governor Christopher Waller
and Federal Reserve Bank of New York President John Williams.
The Fed's hawkish outlook kept the dollar supported at
161.44 yen, with only the threat of Japanese
intervention preventing a test of resistance at 161.96, a top
from mid-2024.
The euro eased to $1.1462, after hitting a
three-month low on Friday at $1.1418. Political uncertainty
nudged sterling down 0.2% to $1.3210.
"Amid the uncertainty around a potential challenge against
the UK PM and what that means for the fiscal outlook, the
likelihood is that gilts will remain under selling pressure to
start the week," said Skye Masters, head of market research at
NAB.
In commodity markets, higher bond yields weighed on
non-interest-paying gold which slipped 0.1% to $4,154 an ounce
.