LONDON – Global equity markets rose on July 3, 2026, as a weaker-than-expected U.S. employment report shifted expectations for Federal Reserve monetary policy and reports of new artificial intelligence hardware partnerships boosted Asian technology stocks.
The cooling of the U.S. labor market has provided a catalyst for investors betting on a less aggressive interest rate trajectory, easing pressure on valuations across the FTSE 100 and major Asian indices. This shift comes as semiconductor volatility continues to divide Wall Street, with a record-breaking Dow Jones contrasting against a Nasdaq decline and raising questions over how sustainable the narrow leadership of U.S. equities will be.
The FTSE 100 climbed 40 points to 10,692.58 shortly after the open, extending gains from the previous session when the index rose 174 points to close at 10,652. Trading volumes are expected to remain thin, with many U.S. investors sidelined by the Independence Day holiday and month‑beginning portfolio rebalancing.
The primary driver for the rally was the June nonfarm payrolls report, which showed the U.S. economy added only 57,000 jobs, significantly missing the 113,000 forecast by economists. While the unemployment rate decreased to 4.2%, the decline was attributed to a drop in labor force participation rather than an increase in hiring, underscoring concerns about the underlying strength of the world’s largest economy.
The data also feed directly into the Federal Reserve’s dual mandate on employment and price stability, sharpening the focus on the next meetings of the rate‑setting Federal Open Market Committee as investors reassess the path for borrowing costs under the U.S. central bank’s current framework.
The data “looked soft enough to encourage the market to trim Federal Reserve rate hike expectations for this year,” said Ipek Ozkardeskaya of Swissquote, noting that markets currently price in a 50% probability of a rate hike as early as September.
Commodities and UK Sector Performance
The rally in London was led by precious metals, reflecting a broader market pivot toward safe-haven assets and inflation hedges as rate-hike expectations soften and real yields edge lower. Fresnillo PLC (LSE:FRES) gained 2.6%, supported by a 1.3% rise in gold to $4,174.23 an ounce and a 2.4% jump in silver to $62.47.
The move in metals fed through to other rate‑sensitive and defensively positioned UK names, even as consumer‑exposed and brand‑driven stocks lagged.
Other notable movements in the FTSE 100 included:
- Howden Joinery Group (LSE:HWDN): Up 1.9%, as lower long‑term rate expectations supported domestically focused cyclicals.
- Computacenter PLC (LSE:CCC): Up 1.7%, tracking the rebound in global IT and infrastructure spending plays.
- Imperial Brands PLC (LSE:IMB): Down 0.6%, with defensives giving back some of their recent outperformance.
- Burberry Group PLC (LSE:BRBY): Down 0.5%, amid ongoing concerns over discretionary spending in key Asian luxury markets.
- Next PLC (LSE:NXT): Down 0.5%, reflecting caution around the UK consumer outlook.
Asian Market Recovery and AI Hardware
In Asia, technology stocks spearheaded a recovery following a volatile period for semiconductor equities. South Korea’s Kospi surged between 4.6% and 5.4%, driven by an 8.2% increase in Samsung Electronics. The surge follows reports that Anthropic is evaluating the company to manufacture custom AI chips, a move that would strengthen Samsung’s position in the high-growth foundry market and deepen its role in the infrastructure underpinning generative AI.
Analysts said the prospect of new AI hardware partnerships has helped stabilize sentiment after weeks of sharp swings tied to chipmakers’ earnings guidance and export‑control headlines.
Deutsche Bank’s Jim Reid stated that the recent bout of “tech altitude sickness” appears to be easing, identifying the potential Samsung-Anthropic partnership as a fresh catalyst for the sector and a reminder that structural demand for compute power remains intact even as valuations reset.
Chinese markets also trended higher, with the Hang Seng rising 1.6% and bringing its weekly gain to approximately 4%. The CSI 300 and Shanghai Composite saw more modest gains. This positive sentiment was supported by June services PMI data, which reached 54.1, exceeding the forecast of 53 and indicating expansion in the sector, offering policymakers some reassurance as they balance targeted stimulus with efforts to curb financial risk.
In the region, other indices recorded the following gains:
- Nikkei 225: Up 1.3%
- ASX 200: Up 1.4%, supported by services sector data and firmer commodity prices.
- SSE Composite: Up 0.8%
US Market Divergence and Policy Outlook
Prior to the holiday closure, U.S. indices displayed a marked divergence. The Dow Jones Industrial Average rose 1% to reach a new record high, while the Nasdaq fell 0.8%, dragged down by a semiconductor selloff. The S&P 500 remained nearly flat, slipping 0.1%.
The volatility in tech stocks suggests a continuing reallocation of capital as investors weigh the long-term potential of AI infrastructure against short-term valuation concerns and tighter financial conditions. At the same time, the labor data have reinforced expectations that the next move in U.S. rates will be finely balanced between the Federal Reserve’s inflation‑fighting resolve and the risk of overtightening into a slowing jobs market.
The Federal Reserve, operating under its statutory mandate set by the U.S. Congress and implemented through its monetary policy framework, maintains its current policy stance, with the market now adjusting projections based on the June employment data and looking ahead to upcoming FOMC communications for clearer guidance on the timing and scale of any future moves.
Related reading
