US markets reach new highs as trade progress counters jobs concerns

​​​Technology stocks power indices to fresh peaks

​The S&P 500 gained 0.47% to close at 6,227.42, while the Nasdaq 100 surged 0.94% to 20,393.13. Both indices marked new closing highs, extending the recent run of record-breaking sessions that has characterised trading in recent weeks.

​Technology giants led the advance, with Nvidia, Apple and Tesla providing the primary thrust behind the Nasdaq's outperformance. The sector continues to benefit from investor appetite for growth assets, despite ongoing uncertainties around inflation and policy direction.

​Tesla shares bounced 5% after earlier weekly declines, recovering despite posting disappointing second-quarter delivery figures. The rebound suggests traders viewed the numbers as less severe than the dire forecasts that had been circulating, though the stock remains down over 20% year-to-date.

​The Dow Jones managed only a marginal 0.02% decline, remaining within striking distance of its December record close. The divergence between large-cap indices highlights the continued preference for technology exposure over traditional industrial names.

​Vietnam trade breakthrough eases tension concerns

​Markets received a boost from news that the US and Vietnam had reached a trade agreement, with Washington imposing 20% tariffs on Vietnamese exports. While this represents a significant increase from previous levels, it falls well short of the 46% duties that had been threatened.

​The development provided relief to investors who had been bracing for more aggressive trade measures. President Trump's administration has indicated that deals with other nations, including India, may follow soon, though negotiations with key partners like Japan and South Korea appear more challenging.

​Jobs data holds key to Federal Reserve policy path

​All eyes now turn to Thursday's non-farm payrolls (NFPs) report, which arrives a day earlier than usual due to the Independence Day holiday. Economists forecast job growth of 110,000 in June, with the unemployment rate expected to tick up to 4.3%.

​The stakes are particularly high following Wednesday's private payrolls data, which showed an unexpected decline - the first fall in over two years. Such weakness would add weight to arguments for more aggressive Federal Reserve (Fed) easing, with current market pricing implying just a 25% probability of a July rate cut.

​A weak employment report could quickly shift expectations, potentially pushing the probability of near-term easing towards 70%. This would likely trigger significant moves across asset classes, with Treasury yields falling and the dollar weakening against major peers.

​The employment data comes amid broader questions about Fed independence, with President Trump continuing to criticise Chairman Jerome Powell and call for rates to be cut to 1% from the current 4.25%-4.50% range. A UBS survey showed two-thirds of reserve managers now fear Fed independence is at risk.

​Currency and commodity markets reflect mixed signals

​The US dollar remains close to three-year lows against major trading partners, reflecting expectations for Fed easing and concerns about fiscal policy under the new administration. Sterling fell sharply overnight on UK fiscal concerns, dropping 0.8% after the government's welfare reform reversal sparked gilt yield spikes.

​Oil prices declined after an initial 3% surge triggered by Iran's suspension of cooperation with UN nuclear inspectors. crude oil futures reflect the ongoing tension between geopolitical risks and demand concerns, with traders watching for further developments in Middle East tensions.

​Gold eased slightly but remains well-supported near $3,350.00 per ounce. The precious metal continues to benefit from uncertainty around monetary policy and geopolitical tensions, though any signs of Fed hawkishness could trigger profit-taking.

​Looking ahead: jobs data and earnings season in focus

​The immediate focus remains squarely on Thursday's employment report, which has the potential to significantly alter market expectations around Fed policy. A weak reading would likely trigger a relief rally across risk assets, while stronger-than-expected data could prompt a reassessment of rate cut timing.

​Beyond the jobs data, investors are preparing for the start of earnings season, with technology companies once again likely to be in the spotlight. Corporate guidance around artificial intelligence (AI) spending and revenue growth will be particularly closely watched, given the sector's outsize influence on broader market performance.