USA

The US equity market navigated a holiday-shortened trading week (markets closed Friday, July 3rd, for Independence Day) dominated by labor-market data, Fed-independence headlines, and a marked de- escalation in Middle Eastern tensions. The week opened on a strong note as the Dow Jones Industrial Average closed above 52,000 for the first time on Monday, June 29th, buoyed by Alphabet's inclusion in the index (shares +4%) and a broad tech relief rally following the prior week's sharp losses, while sentiment was further lifted by a Supreme Court ruling upholding Federal Reserve Governor Lisa Cook's position — reinforcing central bank independence — and by reports that the US and Iran had agreed to halt hostilities after a weekend flare-up. The ISM Manufacturing PMI, released July 1st, registered 53.3, down from 54.0 in May but marking a sixth straight month of expansion; new orders and production continued to expand at a more measured pace, the Prices Index posted its largest one-month drop since July 2022 (from 82.1 to 73.0), and the Employment Index improved to 49.7, though it remained marginally in contraction. Initial jobless claims for the week ending June 27th eased to 215,000 from a revised 216,000, holding the four-week moving average at 222,000, even as continuing claims rose to 1,814,000. The week's centerpiece was Thursday's June nonfarm payrolls report, released a day early ahead of the holiday, which showed the economy added just 57,000 jobs — well below the roughly 115,000 consensus and the softest print since February — with May's gain revised down to 129,000 from 172,000 and April's to 148,000 from 179,000, while the unemployment rate ticked down to 4.2%. Markets read the soft report as a mixed blessing: it signaled cooling momentum but also reduced the implied probability of a Fed rate hike at the July FOMC meeting from roughly 29% to about 18%, a welcome shift given Fed Chair Kevin Warsh's hawkish tone at the ECB's Sintra Forum, where he reiterated that inflation "remains too elevated" despite growing optimism around AI-driven productivity gains. Equities finished the abbreviated week mixed: the Dow was the standout performer, closing at a fresh record near 52,900, while the S&P 500 and Nasdaq Composite ended little changed to modestly higher after a renewed slide in semiconductor names (Teradyne, KLA) capped tech-sector gains late in the week, and the small-cap Russell 2000 lagged as it briefly slipped back below the 3,000 level.

Europe

European equities extended their advance for a fourth consecutive week, as encouraging inflation data and easing energy prices offset a cautious undertone from the ECB's annual Forum on Central Banking in Sintra, held June 29th–July 1st under the theme "Shaping Europe's future: innovation, growth and stability." The week's key data point was Eurostat's flash estimate showing euro-area annual inflation cooling to 2.8% in June, down from 3.2% in May and below the 3.0% consensus — the lowest reading since February, before the Iran conflict disrupted energy markets — as energy inflation retreated to 8.7% from 10.8% and the core rate (excluding energy and food) eased to 2.4% from 2.6%; disinflation was broad-based across Germany (2.4%), France (2.0%) and Italy (3.1%), though Spain held steady at 3.6%. Separately, Eurostat reported euro-area unemployment unchanged at 6.2% in May, with youth unemployment at 14.7%, while the UK's final Q1 GDP reading confirmed 0.6% growth and the Nationwide House Price Index showed UK home prices rising 2.2% year-on-year in June. At Sintra, ECB President Christine Lagarde declared that "monetary policy has gone back to basics" after more than a decade of unconventional tools, while acknowledging that Europe lags the US in AI investment and frontier-model development; money markets nonetheless continued to price a greater-than-50% probability of a further quarter-point ECB hike by September, even as the softer inflation print modestly eased the urgency for additional tightening, leaving German 10-year Bund yields little changed near 2.88%. Against this backdrop, the pan-European STOXX Europe 600 Index rose by roughly 2% over the week to reach fresh 52-week highs, with Germany's DAX 40 the standout performer at +3.69%, followed by France's CAC 40 (+1.07%) and the UK's FTSE 100 (+1.38%), while Spain's IBEX 35 posted a more modest gain amid a softer mid-week showing for Spanish equities; sector leadership rotated toward banks, industrials and defense names such as Rheinmetall, while consumer-discretionary and luxury names including LVMH and Hermès lagged on demand concerns.

Japan

Japanese equities were the standout performer among developed markets this week, propelled by a stronger-than-expected Bank of Japan Tankan survey, persistent yen weakness, and continued momentum in AI- and semiconductor-related names. The BOJ's quarterly Tankan survey, released Wednesday, July 1st, showed sentiment among large manufacturers rising to +22 from +17, its strongest reading since 2018 and a fifth consecutive quarterly improvement, driven by robust demand for AI- and chip-related capital equipment, while sentiment among large non-manufacturers improved for the first time in five quarters, to +37. The final June Manufacturing PMI was revised up to 54.8 from a preliminary 54.5, reinforcing the picture of resilient factory-sector momentum even as the Middle East conflict weighed on sentiment within the petroleum and coal segment. Labor market conditions remained tight, with the unemployment rate holding at 2.5% in May, matching its lowest level since July 2025. The yen, meanwhile, continued to slide to roughly ¥162 per dollar — its weakest level in around 40 years — even after the BOJ's June rate hike to 1.00%, stoking speculation over potential intervention ahead of thin US-holiday trading on Friday. Against this backdrop, the Nikkei 225 capped a remarkable June with a 5.3% monthly gain, its third consecutive monthly advance, and closed July 1st at 70,475 (+0.59% on the day), within roughly 3.5% of its all-time closing high of 73,007 set earlier in June, with chip-equipment makers Taiyo Yuden (+12.4%), Sumco (+17.4%, its highest close since 2007) and Screen Holdings (+9.5%, a record high) leading gains; the broader TOPIX Index held above the 4,000 mark, adding 0.42% to 4,012. Volatility persisted around the AI trade, however, as sharp swings in US semiconductor names — the Nasdaq 100 fell as much as 1.8–2% intraday on multiple sessions — periodically weighed on Tokyo sentiment, with the Nikkei giving back some gains into the following week as profit-taking emerged in high-priced technology shares.

China

Chinese equities diverged positively from the broader global risk backdrop, supported by an improving manufacturing PMI complex, targeted PBOC liquidity operations, and easing Middle East-related supply risk following signs of progress toward a Doha peace deal. China's official NBS Manufacturing PMI rose to 50.3 in June, moving back into expansion and beating expectations — a reading corroborated the following day by the private-sector RatingDog (formerly Caixin) Manufacturing PMI, which eased only slightly to 51.7 from 51.8, while the RatingDog Composite/Non-Manufacturing gauge edged up to 50.2 from 50.1. Both surveys highlighted continued strength in high-tech and AI-linked export categories even as more domestically oriented and upstream segments lagged, and the Emerging Industries PMI — a leading indicator — retreated 2.5 points to 50.4 as production-demand and pricing indicators softened, pointing to an uneven recovery beneath the improving headline numbers. The People's Bank of China reinforced its supportive liquidity stance during the week, injecting roughly CNY 300 billion via overnight reverse repos on Monday and a further CNY 600 billion on Tuesday at a 1.25% rate, underscoring policymakers' continued focus on short-term funding conditions. The Shanghai Composite extended its recent advance, closing at 4,112.45 on July 1st — its highest level in months — building on a 0.63% June gain and an approximate 5% advance for the second quarter, powered largely by sustained buying in AI and semiconductor-related names; the divergence from Western markets was notable, with the index posting gains even as several European benchmarks slipped mid-week. Hong Kong's Hang Seng Index, meanwhile, was closed on Wednesday, July 1st, for a public holiday marking the anniversary of the establishment of the Hong Kong Special Administrative Region, and traded in a comparatively narrow range around the 23,000 level for the balance of the week, broadly tracking the mainland's improving sentiment and the wider Asia-Pacific bounce as global risk appetite firmed into the week's close.