As of 12:00 Germany time (CEST, UTC+2)
TL;DR: Global equities moved higher on Friday after weak U.S. payroll data reduced expectations for an imminent Federal Reserve rate increase. Europe reached a record, Asian chip markets recovered and the dollar softened. Lower oil and slightly easier rate expectations supported the wider market, although semiconductor volatility and disrupted global shipping remain sources of inflation and earnings risk.
In Asian Equity Markets stocks recovered as buyers returned to semiconductor shares after a difficult start to the second half. South Korea's KOSPI closed around 6 percent higher, while the wider Asia-Pacific index outside Japan gained roughly 1.1 percent and ended a two-day decline. Regional business surveys were also constructive. Japan's services sector returned to expansion, and stronger overseas demand helped support Chinese activity despite a slight moderation in overall services growth. The chip rebound was sharp, although it followed equally sharp selling earlier in the week.
In European Equity Markets stocks reached fresh records as the rally continued to broaden beyond technology. The pan-European STOXX 600 touched 651.77 before easing from its intraday high, leaving the index on course for its strongest week in more than a month. Utilities, industrials and basic materials led the advance, while selected semiconductor names also recovered. Germany's DAX edged higher, while French and UK benchmarks were broadly steady. Europe's recent strength has rested on a favourable combination of lower oil, softer inflation and less demanding valuations than the largest U.S. technology companies.
In U.S. Equity Markets cash markets were closed ahead of the Independence Day holiday. Futures had pointed higher, with S&P 500 futures up around 0.3 percent and Nasdaq futures gaining roughly 1 percent. Thursday's session showed how wide the gap inside the U.S. market has become. The Dow reached a record close, while the Nasdaq fell as semiconductor and AI-linked shares remained under pressure. The weaker jobs report gave growth valuations some relief by reducing expectations for a near-term rate increase, but the technology complex still needs earnings support after a volatile June.
In Commodities Markets oil was broadly steady near four-month lows as traders continued to monitor the U.S.-Iran peace process and the gradual reopening of the Strait of Hormuz. Brent traded around $71.80 per barrel and WTI near $68.70. At least five Saudi supertankers carrying around 10 million barrels have exited the strait, while Kuwait has increased production sharply from May's disrupted levels. The Brent curve has moved into contango, suggesting that the market is becoming less concerned about an immediate shortage and more conscious of growing near-term supply.
In Currency Markets the dollar weakened after the payroll report reduced the urgency around further Federal Reserve tightening. The dollar index fell toward 100.7, while USD/JPY held close to 161 as thin holiday liquidity and the risk of Japanese intervention limited fresh positioning. The yen remains near historically weak levels, but the combination of lower oil and softer U.S. labour data has removed some of the pressure that pushed the pair above 162 earlier in the week.
In Bond Markets the U.S. cash Treasury market was closed, leaving investors to work with Thursday's post-payroll repricing. The U.S. 10-year yield was last around 4.48 percent, while the probability of the Fed leaving rates unchanged in September rose to roughly 47 percent. Euro-zone yields moved modestly higher in thin trading, with Germany's 10-year Bund yield near 2.92 percent. Softer employment data has reduced the immediate tightening risk, although inflation linked to shipping disruptions may take longer to fade than the oil-price shock itself.
The Cross-Asset Read
The week ended with a healthier mix than it began.
Europe reached a record with utilities, industrials and materials doing much of the work. South Korean chips bounced sharply, but the wider rally no longer depends on semiconductors rising every day. Weak payrolls also took some heat out of the Fed debate without pointing to a sudden collapse in activity.
Oil is providing another tailwind. Brent remains close to $72, Gulf supply is returning and the forward curve is no longer signalling an immediate shortage. Shipping capacity is still constrained by months of rerouting around Hormuz, so some of the cost pressure may continue showing up in goods inflation even with crude prices lower.
The useful flag for next week combines oil and rates. Brent holding below $72 and the U.S. 10-year yield reopening below 4.50 percent should keep the breadth trade supported. If chip shares weaken again with both conditions still in place, valuation and positioning are doing the damage.
The rally is becoming less spectacular and more balanced. That is usually a better foundation.
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