HG MARKETS: 

Global financial markets traded with a positive tone on Friday as investors reacted to softer-than-expected US labor market data, which reinforced expectations that the Federal Reserve is unlikely to raise interest rates in the near term. Although US equity markets remained closed for the Independence Day holiday, stock index futures pointed higher, reflecting improved investor sentiment driven by easing monetary policy expectations and resilient economic fundamentals. The latest US employment report showed that job growth moderated in June, signaling a gradual cooling in the labor market without indicating a sharp deterioration in economic activity. While the unemployment rate edged lower, the softer pace of hiring strengthened market expectations that inflationary pressures may continue to ease, reducing the need for immediate policy tightening by the Federal Reserve.

Federal Reserve Chair Kevin Warsh recently stated that inflation risks have moderated considerably compared with previous months, while emphasizing that policymakers will continue to base future decisions on incoming economic data. His comments reinforced the Federal Reserve’s data-dependent approach and prompted investors to scale back expectations for a near-term interest rate increase. Market pricing for a July rate hike declined sharply, while expectations for additional tightening later this year also moderated. The prospect of a less aggressive Federal Reserve supported risk appetite across global equity markets. Asian stocks rebounded after recent weakness, with technology and semiconductor shares leading gains as investors returned to growth-oriented sectors. Improved sentiment surrounding artificial intelligence investment also encouraged buying interest after recent profit-taking weighed on the technology sector.

South Korea’s equity market outperformed regional peers, supported by strong gains in semiconductor manufacturers following reports that artificial intelligence developer Anthropic is exploring plans to develop advanced AI chips in partnership with local industry leaders. Japanese and Singaporean equities also advanced as easing US interest rate expectations improved the outlook for global risk assets. Meanwhile, investor attention remained focused on the electric vehicle sector after Tesla reported stronger-than-expected second-quarter vehicle deliveries. The results boosted confidence that demand is stabilizing despite a challenging global automotive environment. Strong European sales, resilient Chinese demand, and the successful launch of lower-cost vehicle models contributed to the company’s performance, driving gains among several major Chinese auto component suppliers.

Economic data from China also provided additional support to market sentiment. The country’s services sector expanded at a faster-than-expected pace in June, reflecting solid domestic consumption and improving overseas demand. New business activity remained firmly in expansion territory, while services exports recorded their strongest growth in several months. Although companies reported rising input costs due to supply disruptions linked to Middle East tensions, business confidence remained broadly resilient. Geopolitical developments continued to influence investor sentiment. Discussions surrounding the Strait of Hormuz remained in focus after reports suggested that several European and Gulf officials are evaluating the possibility of transit fees for commercial vessels using the strategic waterway. While no formal agreement has been reached, the proposal reflects ongoing concerns over maritime security following months of heightened tensions between the United States and Iran.

US President Donald Trump has reiterated that diplomatic efforts with Iran remain active and expressed optimism that negotiations could eventually lead to a lasting peace agreement. However, investors continue to monitor developments cautiously, recognizing that any setback in negotiations could quickly revive concerns over global energy supplies and inflation. Looking ahead, market participants will closely monitor upcoming US inflation data, Federal Reserve commentary, and further progress in US-Iran negotiations for fresh direction. Overall, easing expectations of additional US monetary tightening, resilient global economic data, and cautious optimism surrounding geopolitical developments continue to provide a supportive backdrop for global financial markets, although uncertainty surrounding the Middle East remains an important risk for investors.