U.S. equity markets ended the shortened holiday week with the Nasdaq Composite, S&P 500 Index, and Dow Jones Industrial Average all in the green, according to data received from the Standard Investment Bank (SIB).
The S&P 500 gained 1.76%, the Nasdaq 100 rose 0.72%, and the Dow Jones advanced 1.99% to a fresh record high, supported by strength in more traditional sectors. Within the S&P 500, communication services, financials, and consumer discretionary stocks led performance, whereas real estate, utilities, and energy sectors lagged.
U.S. markets were closed on Friday for the Independence Day holiday. Economic data pointed to a softer labour market. The Labor Department reported that nonfarm payrolls increased by just 57,000 in June, well below forecasts of roughly 110,000 and representing the weakest monthly gain since February’s decline. Despite slower hiring, the unemployment rate edged down to 4.2%.
The weaker employment report reduced expectations for further monetary tightening, with the CME FedWatch Tool showing the probability of a July Federal Reserve rate increase falling from approximately 29% before the release to about 18% afterward. Meanwhile, the Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) indicated that job vacancies rose modestly to 7.594 million in May, surpassing market forecasts and reaching their highest level since May 2024.
Hiring and voluntary quit rates remained largely unchanged. Moving across to Europe, the pan-European Euro STOXX 600 Index advanced 2.71% over the four trading days. Lower oil prices helped improve investor sentiment by easing concerns that Middle East tensions would significantly damage economic growth or fuel inflation. Eurozone inflation slowed more than expected in June, with consumer prices rising 2.8% year over year compared with 3.2% in May.
Although inflation remains above the European Central Bank’s 2% target, the latest figures reduce pressure for additional interest rate increases. Eurostat reported that eurozone unemployment held steady at 6.2% in May. Meanwhile, revised data confirmed that the UK economy grew 0.6% during the first quarter of 2026. Nationwide reported that UK house prices increased 2.2% from a year earlier in June, slightly below market expectations but still indicating improving housing market conditions. Japanese equities also joined in to the market gains through Thursday.
The Nikkei 225 added 0.55%, while the broader TOPIX Index gained 2.55%. Investors rotated out of technology and semiconductor stocks following their recent AI-driven rally, while financial and cyclical sectors benefited from higher bond yields and stronger business confidence. Japan’s 10-year government bond yield rose to 2.78% from 2.60% the previous week as investors anticipated persistent inflation driven by higher energy costs.
Markets also continued pricing in further Bank of Japan policy tightening while assessing the government’s large-scale public-private investment program. The yen briefly weakened beyond JPY 162.5 per U.S. dollar—its lowest level in nearly four decades—before rebounding sharply amid renewed speculation that Japanese authorities could intervene in currency markets.
Chinese equities produced mixed results through Thursday. Better-than-expected manufacturing data and improved liquidity conditions initially supported sentiment, but a global sell-off in technology stocks later pressured semiconductor and AI-related shares. The CSI 300 fell 1.15%, while the Shanghai Composite was little changed. Notably, the People’s Bank of China introduced its new overnight reverse repo facility, injecting CNY 300 billion on Monday, followed by CNY 600 billion on Tuesday at an overnight rate of 1.25%. The initiative is intended to improve short-term liquidity management and strengthen the transmission of monetary policy rather than signal broad monetary easing.
Data highlights: USD Unemployment Rate (Jun) remained at 4.3%, in line with expectations. USD Non-Farm Payrolls (May) fell -391bps, from 179K to 172K, much softer than the expected decrease to 85K. CHF Inflation Rate YoY (Jun) fell -10bps, from 0.6% to 0.5%, in line with expectations. EUR Inflation Rate YoY (Jun) fell -40bps, from 3.2% to 2.8%, stronger than the expected – 20bps decrease to 3%. EUR Core Inflation Rate YoY (Jun) fell -20bps, from 2.6% to 2.4%, against the expectation to remain the same at 2.6%. EUR Unemployment Rate (May) remained unchanged at 6.2%, against an expected +10bps increase to 6.3%. GBP GDP Growth Rate YoY (Q1) stayed the same at 0.9%, against an expected +20bps increase to 1.1%. JPY Unemployment Rate (May) remained at 2.5%, in line with expectations.
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