US Jobs Miss Triggers Record European Stock Rally

European equity markets rallied to record highs on July 2 and 3, 2026, driven by a significant miss in US labor data. The Bureau of Labor Statistics reported that June non-farm payrolls rose by only 57,000, far below the consensus estimate of approximately 110,000 to 115,000. Investors interpreted the cooling labor market as a sign that the Federal Reserve System may forgo imminent interest rate hikes, triggering a surge in the pan-European STOXX 600 and the German DAX, the latter of which reached a new all-time high.

In London, the FTSE 100 hit a two-month high, closing at 10,652.87 on Thursday. Market activity was supported by AstraZeneca's $1.77 billion deal with China's CSPC Pharmaceutical Group and Genel Energy's $360 million acquisition of Capricorn Energy. However, the rally was tempered by a 2.1% decline in technology stocks following losses in Asia and on Wall Street.

Monetary policy remained a focal point as Bank of England Governor Andrew Bailey maintained that the central bank is not complacent regarding inflation. While the US Fed's potential pause bolstered gold prices and European equities, Bailey ruled out immediate domestic easing, stating that interest rate cuts are "off the table at the moment."

By Friday, markets remained positive amid easing geopolitical tensions in the Middle East. The Dow Jones Industrial Average and STOXX 600 both reached record highs, while WTI crude oil prices fell to a 4.25-month low following increased shipments from the United Arab Emirates and improved shipping security in the Strait of Hormuz.