Stocks on Wall Street climbed to new highs after investors latched on to stronger-than-expected US jobs growth, despite the prospect it may stay the Federal Reserve’s hand in cutting interest rates.
US markets closed early for the Independence Day holiday, which also ushered in President Donald Trump’s big and beautiful tax and spending bill, which will add another US$3.4 trillion to the federal government deficit over the coming decade.
Meanwhile, US Treasury secretary Scott Bessent expects to see a flurry of trade deals ahead of the July 9 deadline, with about 100 countries expected to enjoy the lower bound reciprocal tariff of 10% – the level New Zealand attracted on Trump’s Liberation Day.
And British assets recovered from their sputter after prime minister Kier Starmer got in behind chancellor Rachel Reeves, whose future was questioned after the backdown on welfare reform.
I need a break in the weather
Wall Street rallied into the Independence Day holiday in abbreviated trading, with the S&P 500 up 0.8% with gains across most of the Magnificent 7 megastocks driving a 1% increase for the Nasdaq Composite. Chipmaker Nvidia climbed 1.3% giving it a market capitalisation of US$3.84 trillion as it closes in on toppling the record value set by Apple.
US stock markets were buoyed by stronger-than-expected jobs growth in the non-farm payrolls report, with 147,000 jobs added in June, and a lower unemployment rate than anticipated at 4.1%.
Investors shrugged off the prospect that the employment figures will give the Fed another reason to shy away from cutting the federal funds rate when it reviews policy later this month.
“Focus was on the headline figures and these data supported the Fed’s characterisation of the economy as showing solid labour market conditions, with a low unemployment rate, and therefore in no need of any immediate additional monetary accommodation,” Bank of New Zealand senior market strategist Jason Wong said in a note. “The data all but ruled out the Fed cutting rates at the end of this month and the next full rate priced shifted from September to October.”
After the bell, US legislators narrowly passed President Donald Trump’s big and beautiful tax and spending bill, confirming tax cuts from his first term, funding his immigration crackdown and cutting healthcare spending. The kiwi dollar traded at 60.64 US cents at 7am in Auckland from 60.69 cents yesterday.
Trying to take a breath
Meanwhile, the July 9 deadline for US trading partners to put forward their best deal to limit the tariff impost they’ll face is drawing nearer. US Treasury secretary Scott Bessent said he expects a flurry of deals in the coming days, with about 100 countries likely to receive a reciprocal tax rate of 10%.
European Commission president Ursula von der Leyen is targeting an agreement in principle by the deadline.
Stock markets on the other side of the Atlantic were stronger, with the UK’s FTSE 100 up 0.6% and Germany’s DAX 30 gaining 0.6%.
British assets were broadly stronger after UK prime minister Kier Starmer reaffirmed his support for his chancellor Rachel Reeves, who also stuck to her commitment to fiscal discipline after a backbench revolt prompted a backdown on welfare reform.
The kiwi dollar traded at 44.45 British pence from 44.53 pence yesterday.
The upbeat tone is set to flow into the antipodes, with Australian futures pointing to a 0.3% gain for the S&P/ASX 200 index when it opens.
No local data is scheduled for today, while the US holiday is expected to keep Friday trading relatively quiet across Asia.
Reporting by Paul McBeth. Image from Victória Kubiaki on Unsplash.