Jobs data sparks Wall Street rally
Wall Street decided to throw itself a party on Thursday, with the S&P 500 and Nasdaq 100 both hitting fresh record highs in what can only be described as a classic case of American optimism in the face of looming uncertainty. The rally was sparked by a surprisingly robust jobs report that saw nonfarm payrolls (NFPs) surge by 147,000 in June, crushing expectations of 110,000, while unemployment dropped to a healthy 4.1%.
The strong jobs data has effectively killed any remaining hopes of a July rate cut, with traders now pricing in just a 68% chance of a September reduction. This should have been a concern for equity markets, but apparently not when you’re riding the wave of artificial intelligence euphoria and solid economic fundamentals.
Nvidia edges closer to Apple’s crown
Nvidia, never one to miss a celebration, gained another 1.3% to push its market capitalisation to a mind-boggling $3.89 trillion, now breathing down Apple’s neck for the title of world’s most valuable company. It’s a remarkable achievement for a company that was primarily known for making graphics cards for gamers just a few years ago.
Asia markets struggle with tariff fears
However, the feel-good factor didn’t survive the flight across the Pacific. Asian markets opened in a decidedly more sombre mood, with the Nikkei 225 managing just a 0.3% gain while Hong Kong’s Hang Seng slumped 1.3%. The reason? President Trump’s tariff deadline of 9 July is fast approaching, and trade deals remain frustratingly elusive.
Trade deals remain elusive
Despite initial confidence from the Trump administration about securing a “flurry of deals,” only three agreements have materialised so far – with Vietnam, China, and Britain. Trump has now shifted tactics, promising to send letters to trading partners detailing their tariff rates from Friday. The baseline 10% tariff threatens to disrupt global trade flows, particularly affecting Japan and South Korea, where talks have reportedly stalled.
Tax cuts add to uncertainty
Adding to the complexity, the House approved Trump’s sweeping tax-cut bill, which will add $3.4 trillion to the national debt. While this could boost economic demand, it also raises inflationary concerns just as the economy shows signs of strength.
Of course, with US markets closed today for Independence Day, we get the somewhat surreal situation where the rest of the world frets about American policy while Americans are presumably enjoying barbecues and fireworks, blissfully unaware of the market angst they’ve left behind. The question now is whether this optimism can survive the reality check that awaits when markets reopen next week.