Market Summary - July 3, 2026
On July 3, 2026, Asian markets showed positive momentum, indicating a potential return of optimism among investors. This day coincided with a trading holiday in the US, as Americans celebrated the 250th anniversary of independence.
Market Overview
Yesterday's trading was heavily influenced by the release of Non-Farm Payroll (NFP) data, which fell short of expectations, reporting only 49,000 new jobs created compared to the anticipated 107,000. Additionally, previous months' data was revised downwards by 74,000 jobs. Despite a drop in the unemployment rate to 4.2%, concerns arose due to a significant decline in the labor force participation rate, which fell to 61.5%, the lowest since the pandemic.
Wage Growth and Consumer Spending
Wage growth remained steady at 3.5%, but when adjusted for inflation, it resulted in a real decline of 0.7%. This situation is critical as US consumer spending is increasingly reliant on savings, which have dwindled to a mere 3% savings rate.
Market Reactions
The disappointing NFP data led to a correction in the market's expectations regarding Federal Reserve interest rate hikes. While a rate increase is still anticipated before the year's end, the likelihood of such a move in the upcoming meetings has decreased, contributing to a 0.5% decline in the US Dollar against the Euro.
In the equity markets, technology stocks faced a sell-off, with major players like Intel and Micron dropping over 5%, impacting the Nasdaq 100, which fell by 0.7%. Conversely, the Dow Jones Industrial Average gained 1.1%.
Asian Market Performance
Initially, Asian markets reflected the negative sentiment from the US, but they rebounded strongly as the day progressed. The KOSPI index in South Korea surged over 5%, driven by significant gains in SK Hynix (10.2%) and Samsung (8%). The Japanese Nikkei 225 and Chinese Hang Seng also saw increases of over 1%, with Chinese companies benefiting from rising gold prices, which have increased by 4% in the last two days.
Geopolitical Developments
In geopolitical news, former President Donald Trump indicated progress in negotiations with Iran, claiming that Tehran has agreed to most US demands. However, Iranian military statements warned of severe consequences for any violations in the Strait of Hormuz, which may have contributed to a slight uptick in crude oil prices.
Commodity Prices
Brent crude oil prices rose by 0.3% to approximately $72 per barrel, while WTI increased by 0.1% to just above $69. Natural gas prices also saw a rise, with NATGAS up 2.6% at around $3.26 per MMBtu. Precious metals continued their upward trend, with gold trading at over $4,170 per troy ounce and silver at over $62, marking increases of 4% and 6.3% respectively since the start of July.
Macroeconomic Data Insights
During Asian trading hours, attention shifted to June's PMI data. In China, the services sector growth slowed slightly but remained strong at 54.1, driven by an increase in export orders. Japan's services sector index rose from 51.8 to 52.2, reflecting robust domestic demand. In Australia, a modest upward revision to June's PMI data was noted, although new orders declined, and confidence in the economic outlook fell to its lowest since November 2023.
Currency Movements
The US Dollar continued its decline following the disappointing NFP report, with the EUR/USD pair breaking the 1.146 level, rebounding over 1% from recent lows. The Yen also strengthened against the Dollar, with USD/JPY falling below the 161 level, while emerging market currencies showed improved sentiment.