United States
Wall Street Indices Reach New Heights
U.S. equity markets experienced gains during the shortened holiday week, with small-cap equities leading the charge. The Russell 2000 index surged by 3.52%, followed closely by a notable 2.85% rise in the S&P MidCap 400. The Dow Jones Industrial Average wasn’t far behind, marking a 2.30% increase. Remarkably, the Nasdaq Composite and S&P 500 closed at historical peaks for the second consecutive week. Due to the Independence Day observance, markets saw shortened trading on Thursday and remained closed on Friday, resulting in subdued market activity towards the week’s end.
Investors closely tracked political developments surrounding President Trump’s reconciliation bill, narrowly approved by both chambers of Congress during the week. Additionally, trade relations remained prominent, especially following President Trump’s announcement of a fresh agreement with Vietnam and ongoing dialogue with various trade partners as the July 9 tariff moratorium deadline approached.
U.S. Job Market Remains Resilient
June saw stronger-than-anticipated employment growth, with the U.S. economy adding 147,000 jobs—exceeding forecasts and improving upon May’s adjusted figure of 144,000 jobs. Unemployment dropped marginally to 4.1%, alongside a modest 0.2% increase in hourly wages from May.
This positive report contrasted sharply with ADP’s private payroll data, which unexpectedly showed a decline of 33,000 jobs, marking the first negative performance since early 2023, attributed to cautious hiring behavior. Meanwhile, job openings increased notably to 7.8 million in May, marking their highest point since November, especially in hospitality and financial sectors. Initial unemployment claims also improved to 233,000, exceeding analyst predictions.
Mixed Signals from Manufacturing and Services Sectors
Manufacturing activities in the U.S. contracted slightly for the fourth consecutive month, registering an ISM PMI of 49%, marginally improving from May’s figure but still indicating contraction. Conversely, the services sector rebounded into expansion territory, achieving a PMI of 50.8%, primarily driven by a rise in business activities and incoming orders. Price indices softened slightly but continued to reflect inflationary pressures.
Bond Market Benefits from Positive Equity Sentiment
Treasury yields exhibited minimal overall changes during the week, responding to mixed economic indicators. Nonetheless, positive job market reports triggered yield increases across several maturities by Thursday.
Investment-grade bonds posted modest gains, buoyed by limited new issuance. High-yield corporate bonds also saw positive performance amid upbeat investor sentiment linked to strong equity market performance. The high-yield market was particularly active as companies capitalized on the positive mood prior to the holiday weekend.
| Index | Friday’s Close | Week’s Change | % Change YTD |
| DJIA | 44,828.53 | 1,009.26 | 5.37% |
| S&P 500 | 6,279.35 | 106.28 | 6.76% |
| Nasdaq Composite | 20,601.10 | 327.64 | 6.68% |
| S&P MidCap 400 | 3,191.31 | 88.54 | 2.25% |
| Russell 2000 | 2,249.04 | 76.51 | 0.85% |
Europe
European Equities Flat Amidst Varied Performance
European stock indices showed mixed results, with minimal overall changes recorded. France’s CAC 40 rose by 0.82%, while Germany’s DAX declined by 0.41%. Italy’s FTSE MIB and the UK’s FTSE 100 saw modest gains of 0.51% and 0.28%, respectively.
Eurozone inflation reached the ECB’s target of 2.0% in June, with core inflation stable at 2.3%. Services inflation edged up to 3.3%, prompting ECB President Christine Lagarde to adopt a cautious stance, indicating further vigilance against persistent inflationary risks.
In the UK, housing market indicators showed mixed signals. Nationwide reported a 0.8% decline in June home prices, while the Bank of England observed rising mortgage approvals, signaling market recovery post-tax break expiration.
Japan
Japanese Stocks Retreat Amid Stalled Trade Discussions
Japan’s stock market indices, Nikkei 225 and TOPIX, declined by 0.91% and 0.41%, respectively, influenced by stagnation in U.S.-Japan trade negotiations. The yen gained slightly against the U.S. dollar, while the yield on Japan’s 10-year bond slightly increased to 1.45%.
Investor attention remained fixed on the impending tariff reinstatement deadline, with tensions high over Japan’s automotive exports and U.S. agricultural imports. Conversely, sentiment among Japan’s major manufacturers improved marginally according to the Bank of Japan’s Tankan survey, though future confidence projections weakened. Political uncertainty loomed ahead of upcoming Upper House elections amid dissatisfaction with Prime Minister Ishiba’s handling of domestic economic issues.
China
Chinese Stocks Gain Despite Economic Uncertainties
Mainland China’s equity markets experienced positive momentum, with the CSI 300 rising by 1.18% and the Shanghai Composite increasing by 1.08%. Conversely, Hong Kong’s Hang Seng declined by 0.88%.
June’s manufacturing PMI showed modest improvement, though remaining below the growth threshold. Conversely, services sector growth slowed according to Caixin’s PMI, reaching a nine-month low, reflecting cautious hiring behavior and moderated business activity.
Other Markets
Poland Surprises with Rate Cut
The Polish central bank unexpectedly lowered its primary interest rate from 5.25% to 5.00%, citing moderated inflation expectations and better-than-anticipated economic growth projections.
Colombia Maintains Rates Amid Economic Growth
Colombia’s central bank held its benchmark interest rate steady at 9.25%, despite divisions within the Board of Directors. Inflation remained above target, prompting a cautious approach despite an upwardly revised economic growth outlook.
