Global stocks are near their highest levels in history as traders await important U.S. jobs reports. The pound has risen strongly following the Labor Party’s victory in the UK elections. Meanwhile, Bitcoin continues to fall amid a broader cryptocurrency sell-off.
Stock Market Overview
Global stocks are trading near record highs as investors prepare for important U.S. jobs data. The MSCI World index hit a record high, boosted by expectations that the Federal Reserve could cut interest rates after recent weak US economic data. Treasury yields fell and the dollar fell to its lowest level in three weeks.
Key economic influences
US Economic Data and Federal Reserve Expectations
A series of weaker US economic reports have raised hopes that the Federal Reserve will soon cut interest rates. This speculation has helped drive global stocks higher. Quincy Krosby, chief global strategist at LPL Financial, mentioned that the upcoming payroll report could be crucial for the Fed’s decisions, given the recent disappointing ISM manufacturing and services sector PMI reports.
US stock futures suggested a stable start for Wall Street after the July 4 holiday. Tesla Inc. posted a profit in premarket trading, poised to turn positive for the year after a seven-day rally added about $200 billion in market value. Macy’s Inc. also rose after reports that Arkhouse Management and Brigade Capital Management raised their takeover offer to about $6.9 billion.
Struggles in the cryptocurrency market
In contrast to the positive trend in stocks, Bitcoin fell to its lowest level since February, marking its fourth consecutive day of decline. This decline is part of a broader cryptocurrency market sell-off, driven by declining demand for U.S. Bitcoin exchange-traded funds and signs that governments are selling seized tokens. Cryptocurrency-related stocks also fell.
European markets and the impact of the UK elections
European stocks, especially in the technology sector, rose. In the United Kingdom, stocks and government bonds focused on the domestic market rose, and the pound strengthened for a seventh day after the Labor Party’s decisive election victory. Keir Starmer’s party won 412 of the 650 seats in the House of Commons, promising more economic stability.
Samuel Zief, head of global currency strategy at JP Morgan Private Bank, said a clear majority could provide much-needed stability to the UK political scene amid global uncertainty, potentially boosting the pound.
France’s CAC40 index rose for a third day in a row, with signs that Marine Le Pen’s National Rally party is unlikely to win an outright majority in the next election. Despite this, some investors expect a turbulent period for France’s stock and bond markets, with the CAC 40 underperforming other major European indices since the early elections were announced.
Focus on US employment data
Investors are focused on the US jobs report, with payrolls expected to have increased by 190,000 in June, a slower pace than the previous month. Average hourly earnings are expected to have increased 3.9% from a year ago, the smallest increase in three years, while the unemployment rate is expected to remain at 4%, the highest in more than two years.
Richard Flax, chief investment officer at European digital wealth manager Moneyfarm, emphasized the importance of the US data and noted that signs of a labor market slowdown could be welcomed by the market as they could lead to looser monetary policies.
Federal Reserve Outlook
New York Federal Reserve President John Williams noted that while inflation has recently moved closer to the central bank’s 2% target, more progress is needed. “Inflation is now around 2.5%, so we have seen significant progress in bringing it down. But we still have a way to go to achieve our 2% target on a sustained basis,” Williams said during an event at the Reserve Bank of India in Mumbai.
Market movements
Stocks:
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S&P 500 futures were flat at 8:01 a.m. New York time.
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Nasdaq 100 futures rose 0.1%.
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Dow Jones Industrial Average futures were unchanged.
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The Stoxx Europe 600 rose 0.3%.
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The MSCI World index was stable.
Coins:
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The spot dollar index fell 0.1%.
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The euro was unchanged at $1.0820.
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The pound rose 0.2% to $1.2786.
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The Japanese yen gained 0.3% to 160.82 per dollar.
Cryptocurrencies:
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Bitcoin fell 5% to $55,427.91.
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Ether fell 6.3% to $2,945.43.
Captivity:
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The 10-year Treasury yield decreased three basis points to 4.33%.
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The 10-year German bond yield decreased two basis points to 2.59%.
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The UK 10-year yield fell four basis points to 4.16%.
Basic products:
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West Texas Intermediate crude oil was stable.
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Spot gold rose 0.4% to $2,366.50 an ounce.
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