Tech Stocks Rally as Trade Deals Progress – Nasdaq up 0.9%
The two major US tech indices pushed higher in trading yesterday to hit record levels as more positive news on trade deals hit the market and traders looked ahead to key jobs data later today. The Nasdaq gained 0.94%, the S&P 0.47%; however, the Dow traded close to flat, losing just 0.02% on the day. US treasury yields pushed higher despite the ADP Non-Farms number coming in negative for the first time in over two years, the 2-year yield up 1.2 basis points to 3.785% and the 10-year up 3.5 basis points to 4.277%. The dollar also gained on the majors, the DXY up 0.19% to 96.80. Oil prices jumped after Iran suspended cooperation with the UN nuclear watchdog, Brent up 2.91% to $69.06 and WTI up 3.04% to $67.45 a barrel. Gold also pushed higher, up 0.55% to $3,356.77 an ounce.
US Employment Data Key for the Fed and the Market
Tonight’s US employment data drop is key both for the Federal Reserve Bank and for the market, which is now pricing in two rate cuts by the end of the year. Jobs data has been dropping over the past few months in an orderly manner, and this has led to strong pricing of Fed cuts; however, the spectre of potential inflation issues from President Trump’s tariffs has led the FOMC to pause cuts while it waits for clarity on tariff impact. Jerome Powell made it clear again this week that the committee will wait for data to push their hand one way or the other, and in terms of data releases, there is nothing stronger an influence than the Non-Farm Payrolls. Expectation is for a 111k print, and anything significantly off that number (+/- 40k) should see big moves in the market. A much higher result will see a July cut completely off the table and put some doubts on a September move, whilst a lower print will have investor hopes increased for 25 basis points in July and probably lock in for a move by September at the latest.
US Data in Focus Today
Traders are preparing for this to be the busiest day of the week for them, with geopolitical risks smoldering and a huge US jobs data drop coming later in the day. There is nothing significant due out in the Asian session; however, traders will continue to monitor newswires for trade updates and potential issues in the Middle East. The European session sees the key Swiss CPI data out, with expectations for a 0.1% increase priced into the market. However, things could get busy once New York opens, with a raft of data due shortly after the open. As US markets are on holiday on Friday for the big July 4 weekend, we have the big employment numbers out tonight instead of the usual Friday release. The key Non-Farms numbers (exp 111k) are out alongside the Average Hourly Earnings (exp +0.3%), Unemployment Rate (exp 4.3%), and Weekly Unemployment Claims data (exp 240k). They are followed by the ISM Service PMI numbers (exp 50.8) later in the day, and any big deviations from expectations could see the market flying.
