Global Market Quick Take: Asia – July 04, 2025

Key points:

• Macro: NFP beats forecasts and unemployment edges down
• Equities: S&P 500 and Nasdaq 100 hit records
• FX: USD rose on strong jobs data; tax bill passed; USD reached 145 level
• Commodities: Gold is on track for a weekly gain despite yield pressure.
• Fixed income: Treasuries sold off and likelihood of a rate cut in July cut to 5% from 25%

------------------------------------------------------------------

Disclaimer: Past performance does not indicate future performance.

Macro:

• US NFP increased by 147,000 in June, surpassing the forecast of 111,000, as state and healthcare job gains offset federal cuts. The unemployment rate decreased to 4.1%, and wage growth slowed to 0.2%, alleviating inflation worries.
• Trump's tax-cut legislation passed its final hurdle in Congress on Thursday, with the Republican-controlled House narrowly approving a large package to fund his domestic agenda, potentially leaving millions of Americans without health insurance.
• ISM Services PMI increased to 50.8 in June 2025 from 49.9 in May, slightly exceeding the forecast of 50.5. This indicates a rise in economic activity in the services sector after a month of contraction, despite firms frequently citing slow growth and economic uncertainty.
• The US trade gap expanded to $71.5 billion in May 2025 from $60.3 billion in April. Exports dropped 4% to $279 billion from April's record $290.5 billion, with significant declines in nonmonetary gold, natural gas, and finished metal shapes.
• Prime Minister Keir Starmer and Chancellor Rachel Reeves reassured markets by pledging fiscal discipline and economic stability, which lifted gilts and the pound, enhancing confidence in UK assets.

Equities:

• US - On Thursday, the US's three major indices rose over 0.8%, with the S&P 500 and Nasdaq 100 reaching record highs. Nonfarm payrolls rose by 147K in June, surpassing the 106K forecast, and the unemployment rate dropped to 4.1%, indicating a strong economy. Technology stocks surged, with Nvidia up 1.3% and Synopsys rising 4.2%, boosted by strong AI-driven earnings and the White House lifting export restrictions on chip-design software to China. Market optimism was further lifted by progress on a US-Vietnam trade deal and the impending House approval of President Trump's $3.4 trillion tax-and-spending bill. Chip-design stocks like Cadence Design and Synopsys gained around 5%, while Datadog jumped 10% due to its upcoming inclusion in the S&P 500. Markets will be shut on Friday for Independence Day.
• EU - On Thursday, European stocks rose, with the STOXX 50 up 0.2% and the STOXX 600 increasing by 0.3%, continuing gains from the previous session. Investors were buoyed by the US lifting certain chip design export restrictions on China, suggesting easing trade tensions. Semiconductor stocks responded well, with Siemens up 1.6%, Infineon rising by 2%, and NXP Semiconductors jumping 4%. In the UK, political uncertainty persisted due to concerns over Chancellor Rachel Reeves' future, which had prompted a bond selloff. However, Prime Minister Keir Starmer supported Reeves, confirming she will stay as Chancellor of the Exchequer.
• HK - Hang Seng fell 0.6% to 24,070, declining from earlier gains with most sectors experiencing drops, especially in consumer, financial, and tech stocks. In China, services activity hit a nine-month low in June as foreign sales saw their steepest decline in over two years amid growing trade challenges. The index reduced early losses after news of Trump's trade deal with Vietnam and eased U.S. export curbs to China. Additionally, the U.S. House narrowly passed Trump's tax and spending bill. Alibaba dropped almost 3% after announcing a CNY 50 billion subsidy plan, while Meituan and JD.com fell by 2.4% and 2.3%, respectively. Conversely, pharma stocks gained due to new policy support for innovative drugs.

FX:

• USD strengthened following unexpectedly strong US jobs data, leading to a reversal of expectations for Federal Reserve rate cuts. Additionally, the House passed President Trump's significant tax cut and spending bill. DXY rose above 97 level.
• EUR weakened to 1.1760 due to the dollar's strength and was further affected by mixed Services PMI data. The latest ECB Minutes highlighted concerns that maintaining current interest rates might risk missing the inflation target in 2026 and 2027.
• GBP remained stable around 1.3660 as UK Prime Minister Starmer worked to bolster confidence in Chancellor Reeves.
• JPY faced pressure, with USDJPY briefly surpassing the 145 level due to strong US jobs data and a positive risk sentiment.
• Economic calendar – Germany Factory Orders, France Industrial Production, UK S&P Global Construction PMI

Commodities:

• Oil prices remained stable before an OPEC+ meeting likely to announce a significant production increase, potentially increasing a forecasted surplus. Brent was near $69, and WTI was above $67. The cartel is considering a 411,000 barrel-a-day increase for August.
• Gold was set for a weekly gain despite decline, trading near $3,330 an ounce, up 1.7% for the week. It dropped 0.9% after strong US payrolls and lower unemployment, with rising dollar and Treasury yields pressuring gold.

Fixed income:

• Treasuries fell after a stronger-than-expected payrolls report, with 2-year note yields rising 10 basis points to 3.88%. This reduced the chance of a Fed rate cut in July to 5% from 25%. Losses were mainly at the front-end, flattening the yield curve as July rate cut odds decreased. Earlier gains were undone, where Treasuries had rallied following Chancellor Rachel Reeves' reaffirmation of fiscal discipline.

For a global look at markets – go to Inspiration.