Author: Fiona Craig

European stock markets edged higher on Thursday, buoyed by optimism over trade developments, though gains were somewhat restrained as investors awaited the release of the crucial U.S. monthly employment figures.

By 07:05 GMT, Germany’s DAX rose 0.4%, France’s CAC 40 added 0.3%, and the UK’s FTSE 100 climbed 0.5%.

Trade hopes lift sentiment after U.S. gains

European shares took cues from Wall Street’s strong performance overnight, where the S&P 500 and NASDAQ Composite both hit record levels. The positive mood was sparked by President Donald Trump’s announcement that a trade deal had been reached with Vietnam, though details remain limited.

This announcement has raised expectations that further agreements may be finalized ahead of the July 9 deadline. This follows the earlier trade deal with China, which led the Trump administration to ease restrictions on chip design software sales to China.

The European Commission, acting on behalf of the EU, is scheduled to hold discussions with U.S. officials later this week.

Focus on U.S. payroll data

While eurozone services sector data are due later Thursday, all eyes remain on the U.S. payroll report. Analysts forecast an increase of around 110,000 jobs in June, down from May’s 139,000, with the unemployment rate expected to tick up slightly to 4.3%. However, there is uncertainty, as a private sector payroll report on Wednesday showed the first drop in over two years.

The U.S. labor market’s resilience has reassured many Federal Reserve officials that interest rates can remain steady while the impact of tariffs on inflation becomes clearer.

Currently, the market prices in roughly a 25% chance of a rate cut in July, but a weaker-than-expected jobs report could increase those odds substantially.

UK political jitters affect markets

In the UK, investors remain cautious following a sharp rise in gilt yields Wednesday, triggered by concerns over the government’s handling of welfare reform. Chancellor Rachel Reeves appeared visibly distressed in Parliament, with the government citing a “personal matter.” Prime Minister Keir Starmer later affirmed his full support for Reeves.

Corporate news highlights

Currys (LSE:CURY) reported annual results surpassing expectations, with strong sales growth and disciplined cost management helping the retailer navigate inflationary pressures and higher wage expenses.

Meanwhile, Watches Of Switzerland (LSE:WOSG) forecasted full-year revenue growth between 6% and 10%, buoyed by its U.S. business surpassing $1 billion in revenue for the first time, driven by robust consumer demand.

Oil prices pull back amid supply concerns

Oil prices declined on Thursday, giving back some of Wednesday’s sharp gains following an unexpected rise in U.S. crude inventories and ahead of an OPEC+ meeting anticipated to result in increased output.

At 03:05 ET, Brent crude futures fell 0.8% to $68.58 per barrel, while U.S. West Texas Intermediate futures dropped 0.8% to $66.90.

Wednesday’s jump in oil prices was linked to Iran’s suspension of cooperation with the U.N. nuclear watchdog, stoking fears of supply disruptions in the Middle East.

However, U.S. government data revealed a 3.85 million barrel build in inventories last week, raising questions about fuel demand strength during the summer.

OPEC+ producers are expected to meet over the weekend and likely agree to raise output by around 411,000 barrels per day starting in August.

After a slight downturn in May, the eurozone’s services industry bounced back into growth territory in June, according to a recent report.

The S&P Global HCOB Eurozone Services Purchasing Managers’ Index (PMI) rose to 50.5 in June, up from 49.7 the previous month. This final figure also surpassed the earlier preliminary estimate of 50.0.

Since a PMI above 50 signals expansion and below 50 indicates contraction, the latest data confirms a modest recovery for the eurozone’s key services sector.

While activity rebounded, overall demand within the sector remained subdued. Nevertheless, business confidence showed some positive momentum during the month, hinting at a cautiously improving outlook.

The U.S. dollar remained relatively stable on Thursday, hovering near multi-year lows as investors awaited the release of the pivotal U.S. monthly employment report. This key data could heavily influence the Federal Reserve’s upcoming policy decisions.

At 04:00 ET (08:00 GMT), the Dollar Index—which measures the greenback against six major currencies—was largely unchanged at 96.420, lingering close to its lowest point in over three years. The dollar is on track to finish the week down about 0.5%.

Market Focus Shifts to Payrolls

Despite recent news including President Donald Trump’s announcement of a trade deal with Vietnam and Republican efforts in the House to advance a major tax cut package, the dollar’s movement was muted. The market’s attention is squarely fixed on the jobs report due later Thursday, as its results could be decisive for whether the Fed opts for a rate cut at its July meeting.

Economists forecast an increase of 110,000 new jobs in June, a slight slowdown from May’s 139,000. However, concerns linger due to Wednesday’s private payrolls report showing the first drop in over two years.

With inflation pressures appearing moderate and the labor market remaining a focal point, investors are closely watching for signs on whether the Fed will continue its cautious approach.

“Fed Chair Jerome Powell, who favors keeping rates steady, points to persistent inflation and a robust labor market as reasons to maintain a restrictive rate range of 4.25%-4.50% for now,” analysts at ING commented. “Any downside surprise in the jobs data would strengthen the case for a rate cut in July, currently priced in at a 26% probability by the market.”

Sterling Recovers Following Previous Selloff

In European markets, the euro edged up 0.1% against the dollar to 1.1806, approaching the high levels seen in September 2021. Eurozone services PMI figures are due later and may influence sentiment, but the U.S. payroll report remains the key driver.

Last month, the European Central Bank reduced interest rates for the eighth time in a year, lowering the deposit rate to 2%, and signaled it may hold steady at its next meeting. Alfred Kammer, head of the IMF’s European Department, noted on Wednesday that the ECB should maintain its current stance unless new developments significantly alter inflation expectations.

“Inflation risks in the eurozone are balanced,” Kammer said at the ECB Forum in Sintra, Portugal. “We believe the ECB should stay on course and keep the deposit rate at 2% unless there’s a major shock to inflation projections—which we do not currently foresee.”

Meanwhile, the British pound rebounded 0.2% to 1.3665 after dropping nearly 1% the day before amid concerns over UK fiscal policy following government delays on welfare reforms.

“Markets briefly feared that Chancellor Rachel Reeves might resign amid fiscal uncertainties,” ING analysts said. “In hindsight, Prime Minister Keir Starmer may have misread the mood of Parliament and the market by hesitating to fully support her—but he has now done so.”

They added, “The UK faces significant fiscal challenges ahead of the November budget.”

Asian Currencies Show Limited Movement

In Asia, the dollar was steady against the yen at 143.88, with traders cautious amid ongoing talks around U.S. trade deals. The dollar also slipped slightly against the Chinese yuan, trading at 7.1621, following a softer-than-expected private services sector reading for June—though growth continues for the 30th month in a row.

The yuan remained relatively unaffected by recent announcements from major chipmakers that the U.S. has eased some export restrictions to China, effective immediately. This development signals an improvement in Sino-American trade relations, just weeks after both sides agreed on a framework trade deal.

Gold prices remained steady during Thursday’s Asian trading session after climbing over the past three days, with investors adopting a cautious stance ahead of the crucial U.S. non-farm payroll report that could signal the Federal Reserve’s next moves.

The precious metal found support amid ongoing concerns about the U.S. fiscal deficit, as House Republicans worked to advance President Trump’s ambitious tax reform package. Uncertainty surrounding upcoming U.S. trade negotiations before the July 9 tariff deadline also helped maintain positive investor sentiment toward gold.

Spot gold hovered around $3,352.75 per ounce, showing little change, while August gold futures edged up slightly by 0.1% to $3,363.70 per ounce as of early Thursday (01:43 ET).

Gold has rallied nearly 2.5% so far this week, recouping losses from the previous session.

US Jobs Report Seen as Key Indicator for Fed Policy

All eyes are on Thursday’s employment data release to better gauge the Federal Reserve’s interest rate outlook. Fed Chair Jerome Powell’s recent remarks signaled a more cautious and potentially dovish approach, with the possibility of a rate cut next month not ruled out.

While markets largely anticipate a rate cut in September, softer inflation figures and early signs of a slowdown in the U.S. economy have raised expectations that easing could come sooner and be more substantial.

Tensions have escalated as President Trump threatened to replace Powell over his push for immediate rate reductions, adding to speculation about a more aggressive shift in monetary policy.

Expectations of lower rates combined with a weakening U.S. dollar have provided a boost to gold prices this week.

Fiscal Deficit Worries and Trade Deal Uncertainty Support Gold

On the political front, efforts to pass Trump’s extensive tax-cut legislation hit roadblocks in the House on Wednesday, with Republican lawmakers struggling to secure enough support ahead of the July 4 deadline.

The bill, which aims to reduce taxes, cut social spending, and boost military and immigration enforcement funding, is expected to increase the national debt by $3.3 trillion.

Meanwhile, the approaching July 9 deadline for key trade deals remains a source of uncertainty, with only three agreements finalized so far — with the UK, China, and Vietnam — and no indication that the deadline will be extended.

Other Metals Show Mixed Movements

The U.S. Dollar Index inched up 0.1% during Asian hours but stayed near its lowest levels since February 2022.

Silver futures traded flat around $36.46 per ounce, while platinum futures slipped 1.2% to $1,417.80.

Copper prices showed mixed trends: London Metal Exchange futures fell 0.2% to just under $10,000 a ton, whereas U.S. copper futures climbed 0.6% to $5.187 per pound.

Oil prices retreated in Asian trading on Thursday, reversing sharp gains from the previous session after US data revealed an unexpected rise in crude inventories, fueling concerns about weaker fuel demand.

• Brent crude for September delivery dropped 0.6% to $68.68 per barrel.
• West Texas Intermediate (WTI) futures declined 0.7% to $65.58 per barrel as of 21:19 ET (01:19 GMT).

Prices had surged 2.5% to 3% on Wednesday following Iran’s suspension of cooperation with the UN nuclear watchdog, heightening fears of renewed tensions in the Middle East. However, these gains were tempered by concerns over rising supply and slowing demand.

US Inventory Data Highlights Demand Worries

US crude oil inventories unexpectedly increased by 3.85 million barrels in the week ending June 27, defying forecasts of a 3.5 million barrel drawdown. Gasoline stocks also saw a substantial build of 4.19 million barrels, raising questions about summer fuel demand strength.

Attention now turns to the upcoming US nonfarm payrolls report for June, expected later Thursday, which could signal further cooling in the labor market and broader economic challenges for the world’s largest fuel consumer.

OPEC+ Plans Production Boost

The Organization of Petroleum Exporting Countries and allies (OPEC+) is scheduled to meet over the weekend, with reports indicating a planned output increase of 411,000 barrels per day starting in August. This production hike follows similar increases in recent months as the group gradually rolls back two years of deep cuts.

The production increase aims to balance economic pressures from sustained low oil prices and address concerns about overproduction within OPEC members. Meanwhile, US President Donald Trump continues to pressure the cartel to raise production and keep prices low, also urging US producers to boost output.

British stocks started Thursday’s trading session on a positive note, with the FTSE 100 rising 0.5% as of 07:32 GMT. Meanwhile, the British pound slipped below the $1.37 mark after holding above that level for two days, trading around $1.36, up 0.3% against the dollar. European markets also saw modest gains, with Germany’s DAX and France’s CAC 40 rising about 0.3%.

Currys Beats Profit Expectations

Currys PLC (LSE:CURY) reported annual adjusted pre-tax profits of £162 million for the year ended May 3, surpassing analyst forecasts of £159 million. This strong result was driven by steady sales growth and effective cost control, which helped mitigate inflation and rising wage pressures. Group revenue increased 3% to £8.71 billion, while free cash flow surged 82% to £149 million. The company also proposed a final dividend of 1.5p per share and outlined plans to boost margins and reduce capital and cash costs in the coming years.

Chesnara to Acquire HSBC’s UK Life Insurance Business

Chesnara (LSE:CSN) announced its agreement to acquire HSBC Bank’s UK life insurance arm for £260 million ($355 million). The acquisition is expected to generate over £800 million in lifetime cash flow, with annual cash generation exceeding £140 million during the first five years. Chesnara plans to fund the purchase through a mix of cash reserves, revolving credit facilities, and a rights issue.

Baltic Classifieds Reports Strong Profit Growth

Baltic Classifieds Group Plc (LSE:BCG) posted a 40% jump in operating profit to €53.5 million for the year ended April 30, supported by growth in core classifieds segments offsetting a downturn in Estonia’s auto market. Revenue rose 15% to €82.8 million, EBITDA increased 17% to €64.4 million (78% margin), and adjusted net income grew 21% to €54.4 million. Profit for the year reached €44.8 million.

Ryanair Cancels Flights Due to French ATC Strike

Ryanair (LSE:0RYA) announced the cancellation of 170 flights due to a nationwide air traffic controller strike in France affecting Thursday and Friday, impacting over 30,000 passengers.

Shares of Keller Group (LSE:KLR) dropped over 3% after Deutsche Bank downgraded the stock from “buy” to “hold,” reflecting concerns that the company’s strong investment momentum may be nearing its peak. The bank also reduced its price target from 1,800p to 1,660p, while Keller’s stock had closed at 1,434p the previous day.

Analyst Jonathan Coubrough noted that Keller’s financial transformation over the last five years has been impressive, driven by effective management and consistent earnings upgrades. The company’s share price has doubled since late 2023, supported by a 7% EBIT margin in FY24—40% above its 10-year average—and a return on capital employed of 28%, nearly double its historical norm.

However, concerns have emerged due to a significant double-digit decline in group profits during the second half of 2024. Guidance suggests a return to the company’s typical second-half earnings weighting in 2025, implying a year-on-year earnings decline for the first half. Achieving full-year consensus forecasts will depend on a strong rebound in the second half of the year.

This outlook raises questions about near-term earnings growth, contributing to the cautious stance from Deutsche Bank.

Chesnara PLC (LSE:CSN) has completed the acquisition of HSBC Life (UK) Limited for £260 million, marking a significant step in expanding its operations and market presence. The deal is expected to generate over £800 million in cash over the lifetime of the acquired business, including £140 million within the first five years. Funding for the acquisition will come from a mix of internal resources, a revolving credit facility, and a rights issue.

This strategic acquisition will increase Chesnara’s assets under administration by approximately £4 billion and add around 454,000 policies, potentially positioning the company for inclusion in the FTSE 250 index. The move supports Chesnara’s goal of delivering enhanced shareholder value through operational efficiencies, capital synergies, and access to new business opportunities. It also reinforces Chesnara’s status as a leading consolidator in the life and pensions sector.

While Chesnara’s outlook benefits from a solid financial recovery and positive corporate developments, technical indicators caution about potential overbought conditions, and valuation metrics raise some concerns about stock pricing.

About Chesnara PLC

Chesnara PLC focuses on consolidating life and pensions books primarily in the UK and the Netherlands, with additional operations in Sweden. The company pursues strategic mergers and acquisitions to boost cash generation and support sustainable dividend growth, establishing itself as a major consolidator in the life and pensions market.

Watches of Switzerland Group PLC (LSE:WOSG) announced record-breaking revenue of £1.65 billion for the fiscal year 2025, marking an 8% increase compared to the previous year. Adjusted EBIT also rose by 12%, reflecting strong operational performance. Growth in the US market was particularly notable, with sales up 16%, supported by the recent acquisition of Roberto Coin Inc. Meanwhile, the UK segment rebounded to positive growth.

The company continued its expansion strategy by opening new showrooms and refurbishing existing locations, including a new flagship Rolex boutique in London. Additionally, the acquisition of Hodinkee and the integration of Roberto Coin are expected to enhance the company’s leadership in the luxury watch and jewelry sectors. Despite macroeconomic uncertainties, Watches of Switzerland remains confident in its diversified portfolio and growth outlook.

Watches of Switzerland Group maintains a robust financial position, underpinned by steady revenue growth and a healthy balance sheet. A recent share buyback program has also boosted investor interest. However, potential operational hurdles and cash flow pressures present risks, and valuation levels suggest limited upside. Technical signals show mixed trends, with short-term gains balanced by longer-term caution.

About Watches of Switzerland Group PLC

Watches of Switzerland Group PLC operates in the luxury retail sector, specializing in high-end watches and premium branded jewelry. The company has built strong partnerships with leading global brands and commands a significant presence in both the UK and US luxury markets.

Wishbone Gold PLC (LSE:WSBN) has completed a fundraising round by issuing 230,769,230 new ordinary shares, raising £1.75 million. The fundraising saw notable involvement from the company’s directors, reflecting strong internal support. The additional capital will bolster Wishbone’s financial resources, aiding its ongoing projects and strategic objectives.

These newly issued shares will be listed and traded on both the AIM and AQSE markets, which may influence the company’s share distribution and voting dynamics.

About Wishbone Gold PLC

Wishbone Gold PLC is a precious metals company specializing in gold exploration and development. Listed on the London AIM and Aquis Exchange, the company is focused on growing its footprint through targeted investments and capital raising initiatives.