FTSE Bounces Back From ‘Reeves Sell-Off’

UK stock markets rose on Thursday, recouping some of the losses stemming from a fallout over Chancellor Rachel Reeves’ fiscal planning. The S&P 500 rose to a new record high on Thursday in a shortened trading session, ahead of President Trump’s July 9 tariff deadline, with tariff letters set to go out to US trade partners today. Optimism from strong US payrolls data gave way to caution in Asia and Europe, as only three trade agreements; China, the UK, and Vietnam, have been finalised so far.

Equities

The FTSE 100 rose 0.6% on Thursday, recovering some of Wednesday’s losses after reassurance from Chancellor Rachel Reeves on her commitment to fiscal discipline.

The FTSE 250 gained 1.2%. Retail shares led the gains, with Currys climbing 7.1% after posting stronger-than-expected profits on solid demand for mobile and computing products. AO World added 1%. Watches of Switzerland dropped 8% after the luxury retailer warned of pressure on margins linked to tariffs.

Among pharmaceutical stocks, AstraZeneca fell 1.8% and GSK declined 1.1%, with the sector down 1.3% overall. This came despite broader optimism in services, where new data showed the UK services sector expanded at its fastest pace since August, though price growth in the sector slowed to a four-year low.

In the US, the S&P 500 rose 0.83% to a record close of 6,279.36, while the Nasdaq gained 1.02% to 20,601.10. The Dow Jones climbed 0.77% to 44,828.53, just 0.41% below its all-time high. Trading was quiet ahead of the Independence Day holiday, with volume well below the monthly average.

The gains followed a stronger-than-expected US jobs report, which showed nonfarm payrolls rose by 147,000 in June, outpacing the 110,000 expected. The unemployment rate fell to 4.1%, beating forecasts of 4.3%.

Nvidia rose 1.3%, pushing its market capitalisation to $3.89 trillion. The chipmaker is closing in on Apple’s all-time valuation record and remains a central driver of US index gains. Datadog surged 14.9% after it was named as a replacement for Juniper Networks in the S&P 500.

Tripadvisor jumped 16.7% following a report that activist investor Starboard Value had built a stake of over 9% in the travel site. Synopsys and Cadence both rose after the US government eased some export restrictions to China, boosting sentiment around chip design firms.

Investors trimmed expectations for a US interest rate cut in July, with market odds of a cut now at 68% for September, down from 74% a week earlier. Meanwhile, after markets closed, US House Republicans passed President Trump’s major tax and spending bill, expected to add $3.4 trillion to national debt.

Forex & Commodities

The US dollar trimmed Thursday’s gains against the euro and yen on Friday after stronger-than-expected labour data and renewed fiscal concerns surrounding President Trump’s latest tax and spending legislation. The dollar index dipped 0.1% to 96.93, paring its 0.4% rise the day before, and is on track for a second consecutive weekly loss. The euro firmed to $1.1775, marking a 0.5% weekly gain, while the yen rose 0.4% to 144.40 per dollar. Sterling added 0.1% to $1.3668.

Markets are watching closely as the 90-day pause on higher US tariffs ends on 9 July. Trump confirmed tariff letters would begin going out to ten countries at a time from Friday, with rates ranging between 20% and 30%. Japan is sending its chief trade negotiator to Washington, while the EU aims to agree a deal “in principle” before the deadline.

Gold rose 0.4% to $3,340.79 per ounce, up over 2% this week, benefiting from renewed concerns over the US’s fiscal position. US futures traded at $3,351. The recent tax legislation is projected to add $3.4 trillion to the national debt over the next decade, bolstering gold’s appeal.

Oil prices declined, with Brent crude falling 0.32% to $68.58 and WTI down 0.18% to $66.88. Iran’s reaffirmation of its commitment to nuclear non-proliferation and OPEC+’s expected announcement of a 411,000 bpd output increase for August both weighed on sentiment.