Tariff Fears Weigh on Markets; US Jobs Strong, Tech Rallies

The euro weakened against the U.S. dollar on Thursday, with the EUR/USD pair falling following stronger-than-expected U.S. employment data.

June’s Nonfarm Payrolls (NFP) report surprised to the upside, showing the U.S. economy added 147,000 jobs—exceeding both the 110,000 consensus forecast and May’s revised figure of 144,000. The unemployment rate edged lower from 4.2% to 4.1%, while Average Hourly Earnings remained steady, underscoring continued strength in the labor market. Initial Jobless Claims for the week ending June 28 fell to 233,000, below the expected 240,000, while the ISM Services PMI returned to expansion territory, rising from 49.9 to 50.8. The upbeat labor data dampened investor expectations for a near-term rate cut by the Federal Reserve.

Adding to the day’s political developments, the White House confirmed that President Donald Trump’s sweeping $3.4 trillion fiscal package—dubbed the “One Big Beautiful Bill”—has passed Congress and is set to be signed into law at 5:00 p.m. EST on July 4. The legislation includes major tax cuts, spending reductions on social programs, and a rollback of several clean-energy initiatives implemented during the Biden administration.

Across the Atlantic, the euro came under additional pressure following the release of the European Central Bank’s (ECB) June meeting minutes. The report revealed that some Governing Council members expressed reservations about the recent rate cut, preferring to hold interest rates steady amid ongoing economic uncertainty.

Looking ahead, market participants will focus on Germany’s Factory Orders, speeches from ECB officials, and the upcoming release of the eurozone Producer Price Index (PPI), which could offer further insight into the inflation outlook and the ECB’s next policy steps.

Gold prices fell sharply on Thursday, pressured by stronger-than-expected U.S. employment figures that boosted the dollar and reinforced expectations that the Federal Reserve will maintain its current interest rate stance in the near term.

The strong jobs report fueled a rally in the U.S. dollar and sent Treasury yields higher, as investors adjusted their expectations for monetary policy. Fed fund futures now price in just two rate cuts by the end of 2025, down from an anticipated 65 basis points of easing at the beginning of July.

The data solidified the Federal Reserve’s wait-and-see approach, with policymakers signaling they will hold rates steady until there is clear evidence of labor market cooling or renewed disinflationary momentum.

In a separate development, U.S. Treasury Secretary Scott Bessent stated that additional trade deals are in the pipeline following the recent Vietnam agreement. He emphasized that rate decisions lie with the Fed but hinted the administration is preparing to begin the process of selecting a successor to Chair Jerome Powell later this year.

Meanwhile, fiscal policy developments also drew attention. The U.S. House of Representatives advanced President Donald Trump’s sweeping “One Big Beautiful Bill” toward a final vote.

Oil prices slipped on Thursday as investor sentiment soured over escalating trade tensions and a looming increase in global crude supply. Both major benchmarks declined, with thin trading volume ahead of the U.S. Independence Day holiday.

Market participants are closely watching the expiration of President Donald Trump’s 90-day pause on higher U.S. tariffs, set to end on July 9. Several major trade partners, including the European Union and Japan, have yet to secure agreements, heightening fears of slower global economic growth and weaker energy demand. While a preliminary trade accord between the U.S. and Vietnam briefly lifted oil prices earlier in the week, ongoing tariff uncertainty continues to weigh on sentiment.

Adding to bearish pressure, OPEC+ is widely expected to approve a 411,000 barrel-per-day output increase at its upcoming policy meeting. This anticipated rise in supply comes at a time when demand signals remain mixed.

In China, a key market for crude oil, a private-sector survey showed that services sector activity in June expanded at its slowest pace in nine months. Weaker domestic demand and a decline in new export orders raised red flags about the strength of the world’s largest oil importer.

On the geopolitical front, oil briefly found support earlier this week after Iran suspended cooperation with the U.N. nuclear watchdog, fueling concerns over potential regional tensions. In response, the U.S. Treasury imposed fresh sanctions targeting Iranian entities and the Hezbollah network.

U.S. equities rallied in a holiday-shortened session on Thursday, with the US 500 notching another all-time high as stronger-than-expected labor market data and easing trade tensions with China lifted investor sentiment. The market closed early ahead of the July 4th Independence Day holiday.

The strong labor data supports the Federal Reserve’s cautious stance. Chair Jerome Powell recently reaffirmed a patient approach to interest rates, though he acknowledged the central bank could cut rates at one of its four remaining meetings this year if warranted by data. Policymakers remain vigilant, particularly as President Donald Trump’s aggressive tariff strategy continues to influence the economic outlook.

Markets also found support from fresh developments on the trade front. President Trump confirmed the U.S. has reached a trade agreement with Vietnam, the third deal concluded ahead of the July 9 expiration of a 90-day tariff freeze. The agreement includes a 20% tariff on most Vietnamese imports and a 40% tariff on re-exported goods routed through Vietnam—key for sectors like footwear and athletic apparel.

Optimism surrounding global trade increased last week after the U.S. finalized an agreement with China, Canada delayed its digital services tax, and India signaled a deal may be near.

In the corporate sector, chipmakers surged after the U.S. Commerce Department lifted restrictions on certain chip design technologies exported to China—part of the recent trade agreement between Washington and Beijing.

NVIDIA led the sector higher, while CrowdStrike Holdings Inc. jumped almost 4% after Wedbush raised its price target to $575 from $525, citing strong AI-driven demand for cybersecurity.