U.S. stock markets will remain closed on Friday for the Independence Day holiday. However, Wall Street futures pointed higher after weaker employment data reduced expectations of an immediate Federal Reserve interest rate increase.
Asian stocks also recovered, led by South Korean technology shares. Meanwhile, Tesla’s Chinese suppliers rallied, China’s services sector remained strong and investors monitored developments surrounding the Strait of Hormuz.
U.S. Stock Futures Rise Before Holiday Closure
U.S. stock index futures moved higher after the June employment report showed weaker-than-expected job creation.
By 03:11 ET, or 07:11 GMT, Dow futures had gained 148 points, or 0.3%. S&P 500 futures rose 0.4%, while Nasdaq 100 futures advanced 0.9%.
Wall Street’s major indices ended the final session of the shortened trading week with mixed results.
The benchmark 10-year U.S. Treasury yield remained broadly unchanged. Meanwhile, the more interest-rate-sensitive two-year yield moved slightly lower.
Weak Jobs Report Reduces Fed Rate Hike Bets
The U.S. Labor Department reported that job growth slowed more than economists had expected in June.
However, the unemployment rate declined to 4.2%, its lowest level in one year.
The report added to expectations that the Federal Reserve may not need to raise interest rates in the near term.
Comments from Fed Chair Kevin Warsh also influenced sentiment. Earlier in the week, Warsh said inflation risks had eased.
According to Deutsche Bank, the probability of a July rate increase fell from 34% on Tuesday to 18% by the end of Thursday’s U.S. session.
Markets were also pricing in only around 30 basis points of tightening by December.
Asian Stocks Rebound as Technology Shares Recover
Asian stock markets advanced on Friday as expectations of a less aggressive Federal Reserve supported risk appetite.
Investors also returned to technology and semiconductor shares following heavy profit-taking earlier in the week.
Concerns about the sustainability of massive artificial intelligence infrastructure spending had previously placed pressure on chipmakers.
Samsung Electronics was among the strongest performers. Its shares rose following reports that Anthropic, the company behind Claude Code, was considering developing an AI chip with the South Korean semiconductor group.
The gains helped lift South Korea’s KOSPI after two sessions of losses.
Japan’s Nikkei 225 and Singapore’s Straits Times Index also moved higher.
Tesla’s Chinese Suppliers Rally
Shares of several Chinese companies linked to Tesla rose after the electric vehicle manufacturer reported strong second-quarter deliveries.
Auto parts suppliers Ningbo Xusheng, Ningbo Tuopu and Zhejiang Sanhua gained between 5% and 9% during mainland Chinese trading.
Tesla delivered a record 480,126 vehicles during the June quarter.
Strong sales in Europe and modest growth in China supported the result.
The company also introduced lower-priced versions of its Model 3 and Model Y vehicles. These options helped strengthen demand as global fuel prices remained elevated.
Production of an updated Model Y also boosted sales of vehicles manufactured in China.
The figures highlighted China’s continued importance as both a production centre and sales market for Tesla.
China Services Activity Beats Expectations
China’s services sector expanded faster than expected in June, according to a private business survey.
The RatingDog Services Purchasing Managers’ Index declined slightly from 54.4 in May to 54.1 in June.
Nevertheless, the result exceeded economists’ forecast of 53.0.
A reading above 50 indicates growth. China’s services sector has remained in expansion territory since January 2023.
New business increased as both domestic and international demand improved.
Export orders for services grew at their fastest pace since October 2024.
However, supply disruptions linked to the Middle East pushed input costs higher. Companies responded by increasing their selling prices for the first time in four months.
European Leaders Consider Strait of Hormuz Fees
Some European officials reportedly believe ships may eventually need to pay fees to Iran and Oman to pass through the Strait of Hormuz.
Bloomberg reported that some Gulf Arab officials hold a similar view, although this is not the formal position of their governments.
It remains unclear what form the charges could take or how much countries would be willing to pay.
The possibility of new fees has also raised concerns about international maritime law.
Strait of Hormuz Remains a Geopolitical Risk
The Strait of Hormuz has remained a major geopolitical concern since Iran effectively closed the waterway following the joint U.S.-Israeli military campaign in late February.
The disruption sent oil prices sharply higher.
However, crude prices later returned towards pre-war levels after the United States and Iran signed an interim peace agreement.
Both sides held indirect negotiations in Qatar this week over a more permanent deal.
Further meetings are expected after funeral commemorations for former Iranian Supreme Leader Ayatollah Ali Khamenei.
Brent crude futures traded near $72 per barrel. Oil had previously climbed above $110 per barrel after the conflict began.
