London-listed shares rose on Friday following a much softer US jobs report that reduced expectations for further near-term Federal Reserve rate increases. Volume was light as US markets remained closed for the Independence Day holiday, increasing the potential for amplified swings later in the session.
The FTSE 100 was up 0.29% as of 03:23 ET (07:23 GMT). Major continental European benchmarks also advanced, with Germany's DAX climbing 0.75% and France's CAC 40 gaining 0.30%. Sterling strengthened modestly, up 0.16% to $1.3367. With US markets on holiday, European liquidity was notably thin.
The US economy added 57,000 nonfarm payrolls in June, about half of the 113,000 that had been forecast, and headline employment figures for April and May were revised downwards. The unemployment rate dipped to 4.2%, a move that the data attributed to a fall in labour force participation rather than robust hiring. Wage growth was reported to be in line with expectations.
Separately, US-Iran peace talks have been suspended as Iran prepares for a state funeral for former Supreme Leader Ayatollah Ali Khamenei. His body arrived at Tehran's Grand Mosalla complex early Friday, and official ceremonies are planned from July 4 to July 9. Iranian authorities said they expect between 15 million and 20 million mourners to attend.
Qatari and Pakistani mediators indicated that discussions would resume "at the earliest possible time" after the commemorations. Iran's Revolutionary Guard chief warned the US and Israel against any strikes during the procession. Washington announced that a second Marine unit of more than 2,000 personnel is now operating in the region.
Maritime traffic in the Strait of Hormuz recovered to at least 258 vessels last week from 138 the prior week, but that level remains well below pre-war traffic of roughly 130 ships per day.
On the political front in the UK, prime minister-in-waiting Andy Burnham told LBC's Andrew Marr that he would increase business rates on large out-of-town warehouses to finance a 20% reduction for high-street retailers. "I believe there is a case for higher business rates on warehouses," he said, while also pledging to honour Labour's 2024 manifesto commitments on income tax, VAT and national insurance. He declined to name a chancellor ahead of his expected confirmation on July 20.
Commodity markets reflected the mixed backdrop. Brent crude rose 0.32% to $72.03 a barrel and WTI gained 0.10% to $68.76. Gold futures jumped 1.39% to $4,183.65 an ounce, with spot gold up 1.13% to $4,170.36, buoyed by the retreat in the dollar.
Market context
About half the expected US payroll additions failed to materialise in June, a result that has been interpreted by market participants as easing the trajectory for Fed tightening. That dynamic, together with thin holiday liquidity, supported modest gains in UK and European markets on the day.