Market Quick Take – 4 July 2025

Q3-2025 Macro Outlook: Less chaos, and hopefully a bit more clarity

Market drivers and catalysts

• Equities: US/Europe up; strong jobs; tech/semis lead; UK rebounds
• Volatility: VIX at 4-month low; calm but event risk ahead
• Digital assets: Bitcoin stable; IBIT steady inflow; ETHA up; mining splits
• Fixed Income: US short-end yields rise on reduced rate cut hopes
• Currencies: Dollar heading for a small weekly loss
• Commodities: Gold recovers from NFP drop, crude focus on OPEC+ meeting
• Macro events: Germany June Construction PMI, US markets closed for Independence Day holiday

Macro data and headlines

• US NonFarm Payrolls increased by 147,000 in June, surpassing the forecast of 111,000, as state and healthcare job gains offset federal cuts. The unemployment rate decreased to 4.1%, and wage growth slowed to 0.2%, alleviating inflation worries. Despite solid headline figures, the report masked weakness in private payrolls and other potential warning signs of deterioration in the labour market, but still a report that all but removed hopes for a July rate cut.
• Trump's tax-cut legislation passed its final hurdle in Congress on Thursday, with the Republican-controlled House narrowly approving a large package to fund his domestic agenda, potentially leaving millions of Americans without health insurance.
• ISM Services PMI increased to 50.8 in June 2025 from 49.9 in May, slightly exceeding the forecast of 50.5. This indicates a rise in economic activity in the services sector after a month of contraction, despite firms frequently citing slow growth and economic uncertainty.
• The US trade gap expanded to $71.5 billion in May 2025 from $60.3 billion in April. Exports dropped 4% to $279 billion from April's record $290.5 billion, with significant declines in nonmonetary gold, natural gas, and finished metal shapes.
• Prime Minister Keir Starmer and Chancellor Rachel Reeves reassured markets by pledging fiscal discipline and economic stability, which lifted gilts and the pound, enhancing confidence in UK assets.

Macro calendar highlights (times in GMT)

0730 – Germany June Construction PMI 0830 – UK June Construction PMI

US markets closed for Independence Day holiday

Earnings events

Next week: The Progressive Corporation, Fast Retailing, Cintas Corporation, Kongsberg, Delta Airlines

For all macro, earnings, and dividend events check Saxo’s calendar.

Q3-2025 Investor Outlook: Beyond American shores – why diversification is your strongest ally

Equities

• US: US stocks closed higher in a holiday-shortened session, with the S&P 500 and Nasdaq both reaching fresh record highs. The S&P 500 ended at 6,279.35 (+0.83%), boosted by strong June jobs data (nonfarm payrolls +147K vs. 106K expected, unemployment fell to 4.1%). Nvidia gained 1.3%, bringing its market cap near $4 trillion, while Synopsys rose 4.2% on AI optimism and relaxed US export rules to China. Datadog surged on S&P 500 inclusion news. All sectors except communication services rose. Markets are closed Friday for Independence Day.
• Europe: European shares edged higher, with the STOXX 600 +0.4%, DAX +0.61%, and CAC 40 +0.21%. Gains were led by semiconductor stocks after the US eased chip design export restrictions to China; Infineon, NXP, and Siemens outperformed. UK markets rebounded as PM Starmer reaffirmed support for Chancellor Reeves. Services PMIs pointed to improving business activity. Ryanair shares dipped on strike-related flight cancellations. Novartis fell after a key trial disappointment.
• UK: The FTSE 100 rebounded 0.55%, helped by strong business activity data (Composite PMI 52) and reassurances over fiscal discipline from government leaders. Banks and consumer stocks like Lloyds and Currys led gains, while AstraZeneca slipped after M&A headlines. Market confidence improved as political tensions eased and borrowing concerns were addressed.
• Asia: Asia markets were mixed. Hong Kong's Hang Seng lost 0.83% as trade war jitters and weak local data weighed, while China A-shares edged higher (+0.4%) on hopes for easing US-China tensions after export curbs were relaxed. Japan and Australia ended flat, and South Korea’s KOSPI dropped 1.92% on tariff worries. Investors are watching for Trump’s new tariff announcements and further Chinese stimulus.

Volatility

Volatility continued to drift lower ahead of the US holiday. The VIX closed at 16.38—its lowest in four months—reflecting calm despite macro risks. Short-term VIX futures remain elevated, hinting at caution around next week’s tariff and inflation data. For long-term investors, low volatility means cheaper hedges, but light holiday trading can amplify any surprises.

Digital Assets

Crypto markets consolidated after recent gains. Bitcoin steadied near $109,000, while Ethereum traded around $2,557. The IBIT ETF held firm at $62.19, drawing steady inflows, while ETHA recovered to $19.49. Mining stocks diverged: CleanSpark rallied as it increased BTC output, while Riot and MARA saw production declines due to power curtailments. Regulatory focus intensified as a new US Senate bill proposed major crypto tax changes and Ripple applied for a US banking license.

Fixed Income

Treasuries fell after a stronger-than-expected payrolls report, with 2-year note yields rising 10 basis points to 3.88%. Losses were mainly at the front-end, leading to a small bear flattening the yield curve as traders priced out the chance of a July Fed rate cut. US 10-year Notes ended to shortened trading week 8 basis point higher at 4.35% with earlier gains were undone, when Treasuries had rallied following Chancellor Rachel Reeves' reaffirmation of fiscal discipline.

Commodities

• The Bloomberg Commodity Index ended a US holiday-shortened week with a small 0.6% gain (7% YTD), with grains and precious metal market strength offsetting continued weakness in softs, while an 8.5% natural gas slump offset gains across crude and fuel markets.
• Oil prices trade softer, but Brent is currently confined to a relatively tight range. In a holiday thinned market traders will be focusing on global trade tensions and the 6 July OPEC+ meeting that may yield another 411k b/d increase in crude oil production, potentially increasing a forecasted surplus.
• Gold was set for a weekly gain of around 2%, having recovered from two recent selling attempts, the latest being Thursday's drop following the US jobs report, which lowered the prospect of an imminent US rate cut. Instead, the attention turned to trade after Trump said some US trading partners would face tariffs from 1 August.

Currencies

• USD strengthened following unexpectedly strong US jobs data, in a sign traders see less pressure on the Federal Reserve to cut interest rates. The DXY touched a 97.40 high only to drift lower after the House passed President Trump's significant tax cut and spending bill, and after he ratcheted up trade tensions again ahead of next week's deadline for higher tariffs.
• EUR weakened to 1.1720 on Thursday due to the dollar's strength only to recover most of its USD NFP-driven loss, trading this am around 1.1785. Traders also focused on mixed Services PMI data, while the latest ECB Minutes highlighted concerns that maintaining current interest rates might risk missing the inflation target in 2026 and 2027.
• GBP traded stable to higher as UK Prime Minister Starmer worked to bolster confidence in Chancellor Reeves. Yet it remains just one of two currencies, the other being the SEK, that trades down on the week against the Greenback.
• JPY initially weakened to 145.25 following the US jobs report before strengthening to around 144.35 overnight on renewed trade tariff tensions.

For a global look at markets – go to Inspiration.

In addition, the main shipping canal through the Strait of Hormuz currently operates entirely within Omani territorial waters, as vessels actively avoid Iranian waters. Meanwhile, the Gulf Corporation Council (GCC), which includes Saudi Arabia, UAE, Kuwait, Qatar, and Oman, has a mutual defence agreement that treats an attack on one member as an attack on all, though its implementation lacks NATO's automatic response mechanisms.

However, even without a full-scale disruption, the mere threat of interference in the strait could delay shipments and trigger a sharper-than-expected short-term spike in prices, before easing amid a potential release of strategic reserves, especially in the US and China, and a redirection of parts of Saudi and UAE crude oil exports via pipelines to facilities outside the strait.

Brent crude briefly traded above USD 80 per barrel when markets opened on Monday morning, only to suffer another setback, with sellers emerging ahead of key resistance around USD 82.50. Helping to explain why crude did not respond more forcefully to a disruption threat—which, if realised, could send prices towards USD 100 per barrel—is the fact that prices were already elevated ahead of the attack, with traders having positioned themselves for additional upside risks that were then unwound on Monday.

It is also worth noting that the current geopolitical risk premium—which, above USD 80, exceeds USD 10 per barrel—cannot be sustained for long without a tangible supply disruption. Absent that, price gains may struggle to hold, but the stage is nonetheless set for another volatile week across the energy complex.

Another important driver behind any given move in crude oil futures is the activity of speculators who seek to benefit from price movements in both directions. With the latest spike coming after a period of price weakness, it is no surprise that hedge funds held a negative bias on crude, which they were forced to reduce as prices started to rally, thereby adding further upside momentum via short covering.

In the latest update on speculators' behaviour in the futures market covering the week to 17 June—when Brent crude spiked higher by 14%—the ICE Europe Exchange published data showing a 40% jump in the net long position, with the bulk of the increase driven by short sellers reducing their short positions to a 13-month low. With short covering now all but done, additional buying will primarily have to come from fresh longs willing to pay a 10–15% premium relative to the fundamentally justified price—without disruptions—closer to USD 70 per barrel.

Note: The publication of data covering the US futures markets, including WTI, has been delayed from Friday to today following last week’s Juneteenth government holiday.

All developments point to continued volatility in the crude oil market, with the price of Brent in a month's time potentially trading back below USD 70 or above USD 90, depending on which actions Iran chooses to take.