Global Stocks Near Record Highs as US Jobs Data Anticipated

Global stocks are close to their highest levels ever as traders look forward to important US job reports. The pound has risen sharply after Labour's win in the UK elections. Meanwhile, Bitcoin continues to drop amid a broader crypto sell-off.

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Stock Market Overview

Global stocks are trading near record highs as investors prepare for significant US jobs data. The MSCI World Index reached an all-time high, driven by expectations that the Federal Reserve might lower interest rates after recent weak US economic data. Treasury yields fell, and the dollar dropped to its lowest level in three weeks.

Key Economic Influences

US Economic Data and Federal Reserve Expectations

A series of weaker US economic reports has led to hopes that the Federal Reserve will cut interest rates soon. This speculation has helped push global equities higher. Quincy Krosby, chief global strategist at LPL Financial, mentioned that the upcoming payroll report could be crucial for the Fed's decisions, given recent disappointing ISM Manufacturing and Service Sector PMI reports.

US stock futures suggested a steady start for Wall Street after the July 4 holiday. Tesla Inc. saw gains 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 buyout offer to around $6.9 billion.

Cryptocurrency Market Struggles

In contrast to the positive trend in equities, Bitcoin dropped 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 decreasing demand for US Bitcoin exchange-traded funds and indications that governments are selling seized tokens. Shares related to cryptocurrency also fell.

European Markets and UK Election Impact

European stocks, especially in the tech sector, rose. In the UK, domestically focused stocks and government bonds climbed, and the pound strengthened for the seventh day following Labour'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 FX strategy at J.P. Morgan Private Bank, stated that a clear majority could provide much-needed stability to the UK political scene amid global uncertainty, potentially boosting the pound.

France's CAC40 index gained for a third day, with indications that Marine Le Pen’s National Rally party is unlikely to secure an absolute majority in upcoming elections. Despite this, some investors expect a turbulent period for France’s stock and bond markets, with the CAC 40 underperforming other major European indexes since the snap election was announced.

Focus on US Jobs 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 anticipated to have risen by 3.9% from a year earlier, the smallest increase in three years, while the unemployment rate is expected to remain at 4%, the highest in over two years.

Richard Flax, chief investment officer at European digital wealth manager Moneyfarm, emphasized the importance of the US data, noting that signs of a labor market slowdown might be well-received by the market as they could lead to easier monetary policies.

Insights from the Federal Reserve

New York Fed 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 2-1/2%, so we have seen significant progress in bringing it down. But we still have a way to go to reach our 2% target on a sustained basis,” Williams said during an event at the Reserve Bank of India in Mumbai.

Market Movements

Stocks:

• S&P 500 futures remained stable as of 8:01 a.m. New York time.

• Nasdaq 100 futures rose 0.1%.

• Futures on the Dow Jones Industrial Average were unchanged.

• The Stoxx Europe 600 increased by 0.3%.

• The MSCI World Index was stable.

Currencies:

• Dollar Spot Index fell 0.1%.

• The euro was unchanged at $1.0820.

• The British pound rose 0.2% to $1.2786.

• The Japanese yen gained 0.3% to 160.82 per dollar.

Cryptocurrencies:

• Bitcoin fell 5% to $55,427.91.

• Ether dropped 6.3% to $2,945.43.

Bonds:

• The yield on 10-year Treasuries declined three basis points to 4.33%.

• Germany’s 10-year yield decreased by two basis points to 2.59%.

• Britain’s 10-year yield fell four basis points to 4.16%.

Commodities:

• West Texas Intermediate crude remained steady.

• Spot gold rose 0.4% to $2,366.50 an ounce.

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