Market Developments
Global equities advanced over the holiday-shortened week as weaker-than-expected June US labour market data reduced expectations of a near-term Federal Reserve rate hike. The S&P 500 gained 1.8% to 7,483.2, the Dow rose 2.0% to a record 52,900.1, while the Nasdaq underperformed with a 0.7% gain following recent strength in AI and semiconductor stocks. US nonfarm payrolls increased by 57,000 in June, below consensus expectations of approximately 110,000, while prior months were revised down by a combined 74,000. The unemployment rate edged lower to 4.2%, reflecting a decline in labour force participation. Following the release, market-implied expectations of a July Fed rate hike declined from around 29% to 18%.
Oil prices remained below $70/bbl (WTI: $68.7, -0.8% WoW) as shipping through the Strait of Hormuz continued to normalise despite ongoing geopolitical risks. In fixed income markets, the US 10-year Treasury yield rose 11bps to 4.48%, while Japan’s 10-year government bond yield increased 14bps to 2.78%. The Japanese yen briefly weakened to a 40-year low against the US dollar before recovering on speculation of intervention by the Bank of Japan, leaving USD/JPY broadly unchanged over the week.
