European equity markets ended the week on a strong note, with London’s FTSE 100 advancing and Frankfurt’s DAX 40 touching an all-time high.
The FTSE 100 closed up 26.16 points, or 0.3%, finishing the session at 10,679.03, capping a weekly gain of 1.6%.
The FTSE 250 also posted solid gains, rising 121.22 points, or 0.5%, to close at 23,538.80, while the AIM All-Share dipped 1.36 points, or 0.2%, to 776.09.
Germany’s DAX 40 climbed 0.8% in Frankfurt, having earlier reached an all-time high of 25,826.78, while the CAC 40 in Paris closed up 0.4%.
Financial markets in New York were closed for the Independence Day public holiday, resulting in thinner trading volumes across global markets.
Kathleen Brooks, research director at XTB, said there is a “positive tone” in markets heading into the end of the week, pointing to several key forces at play.
“A mixture of relief post the payrolls data, a reversal of the sell-off in the chip stocks and more volatility in the yen are the main narratives today,” she explained.
Thursday’s weak US jobs figures reduced the likelihood of near-term US rate hikes, which Brooks noted tends to benefit growth stocks by lowering borrowing costs and lifting the present value of future profits.
Expectations for a US rate hike in July have diminished to 17% from 40%, according to the CME’s Fedwatch tool, with the probability of any hike by December now falling below 50%.
The yen surrendered some of Thursday’s strong gains amid speculation that the Bank of Japan could intervene to support the currency in thin holiday market conditions.
David Morrison at Trade Nation said there were signs that traders were buying back yen on fears that Japan’s Ministry of Finance may have used today’s thin holiday market conditions as an opportunity to intervene, though he cautioned “there’s no evidence that they have so far.”
UK services activity contracted at its sharpest pace in nearly three-and-a-half years in June, with S&P Global’s final seasonally adjusted services PMI falling to 48.8 points from 49.3 in May.
The final composite output index declined to 49.3 points in June from 49.7 in May, marking the weakest reading since April 2025.
The Bank of England’s Decision Making Panel showed businesses’ year-ahead price growth expectations holding broadly steady at 4%, while consumer price inflation expectations fell from 3.7% to 3.3%.
Gold surged to 4,167.57 dollars an ounce, up from 4,124.43 dollars on Thursday, as softer US jobs data shifted rate expectations and dampened the appeal of fixed income assets.
Dan Coatsworth, head of markets at AJ Bell, said “the shift in rate expectations led to a drop in US Treasury yields, meaning the opportunity on fixed income was slightly diminished and thereby dampening one of the drivers that’s taken money away from gold this year.”
On the FTSE 100, Pearson fell 1.4% after the company apologised and announced that this year’s Sats examination results in England would be delayed by more than a week due to “technical issues.”
Education Secretary Bridget Phillipson described the delay as “deeply frustrating” for schools, parents, and pupils, saying the Government was working to resolve the situation.
On the FTSE 250, Johnson Matthey rose 5.0% after confirming it expects to complete the sale of its Catalyst Technologies business to Honeywell International by the end of August, following final regulatory clearance in China.
Close Brothers jumped 7.9% after Shore Capital analyst Gary Greenwood upgraded the stock to “buy” from “hold”, noting that investors are “adequately compensated for the risks” following recent share price weakness.