Week:

S&P500: +2.33%  FTSE100: +2.30%  Gold: +3.48%  Bitcoin: +5.88%

YTD:

S&P500: +9.11%  FTSE100: +7.78%  Gold: -3.98%  Bitcoin: -28.03%

Dow Hits Fresh Records as a Soft Jobs Report Cools the Fed, While Iran Buries Its Supreme Leader Amid a Fragile Hormuz Truce

Source: MarketPulse (OANDA) | Week ending 3 July / Asia Open 6 July 2026

Wall Street closed out a choppy June and opened July with a bang. Markets rallied through a holiday-shortened week, the Dow hitting fresh record closes and the S&P and Nasdaq recovering ground, even as a sharp wobble in the AI trade and a startlingly weak jobs report scrambled the picture underneath.

What drove markets last week

The Dow Jones Industrial Average notched a run of record closes through the week, finishing Thursday at 52,900.07, up 1.14% on the day. A "great rotation" trade has been pulling money out of hot AI names and into value-oriented industrials, financials and healthcare, a shift reinforced by Alphabet's addition to the Dow on 29 June. The S&P 500 and Nasdaq had a bumpier ride, weighed down by a reversal in the AI trade. Reports that OpenAI is in talks to sell a 5% stake to the US government, and Meta's admission that it may need to monetise excess data centre capacity, unsettled investors already questioning whether AI capital spending has outrun near-term demand. Micron, Applied Materials, AMD and Sandisk all fell hard over the week despite still holding triple-digit year-to-date gains, and Tesla dropped even after blowout Q2 deliveries of 480,126 vehicles, well ahead of Street estimates of 406,600.

The week's pivotal moment came on Thursday, when June's Non-Farm Payrolls report, moved forward a day for the Friday holiday, landed well short of expectations. The US economy added just 57,000 jobs against a consensus of around 110,000-115,000, with April and May payrolls revised down by a combined 74,000. The unemployment rate ticked down to 4.2%, largely on a falling participation rate rather than genuine labour market strength. Markets read the miss as dovish. Fed funds futures pushed the odds of a hike at the 29 July FOMC meeting down to roughly 20%, from around a third the week before, and Treasury yields fell. For the week, the S&P 500 gained 1.8%, the Nasdaq added 2.1% and the Dow rose 2%, a strong finish to a shortened week.

Gold caught a bid on the softer jobs data and a weaker dollar, snapping four straight weeks of declines to close near $4,170 an ounce, up around 2% on the week, though it remains well below the highs touched earlier in the year. The FTSE 100 also had a strong week, up 1.6% to close at 10,679.03, its best level since April, powered almost entirely by Thursday's 1.7% jump on the back of the same US jobs data, plus a run of constructive UK corporate news. Johnson Matthey rallied on Chinese regulatory approval for its Catalyst Technologies disposal to Honeywell, AstraZeneca struck a licensing deal worth up to $1.77 billion with CSPC Pharmaceutical, and Close Brothers gained on a broker upgrade. Bitcoin also rebounded, up around 3.6% on the week to reclaim the $62,000-63,000 area, clawing back some of a brutal June sell-off that had taken it below $59,000. It remains roughly 28% lower year to date and more than 50% off its October 2025 peak.

The setup entering this week

Overhanging everything is the state of the Iran ceasefire. Ayatollah Ali Khamenei, killed in the US-Israeli strikes that opened the war in February, is finally being laid to rest this week in a seven-day state funeral running from 3 to 9 July across Tehran, Qom, Najaf, Karbala and Mashhad, with Iranian officials suggesting turnout could reach into the tens of millions. Diplomacy has effectively paused for the funeral period, and mourners have chanted open calls for revenge against President Trump and Israeli Prime Minister Netanyahu, a reminder the underlying conflict is far from resolved even as June's memorandum of understanding has held so far. The Strait of Hormuz has reopened to a meaningful degree, with tanker convoys transiting again and Brent crude falling to around $70-73 a barrel, its lowest since before the war and a helpful disinflationary tailwind. France and the UK have offered to send naval assets to support freedom of navigation, an offer Iran has explicitly warned against, so the fragility of the reopening should not be underestimated.

On the Fed, Chair Kevin Warsh used his appearance at the ECB's Sintra forum to reiterate that inflation remains "too high," without giving any explicit signal on the 29 July decision. Markets currently price in roughly an 80% chance the Fed holds rates at 3.50%-3.75% this month, though June's dot plot showed most officials now leaning towards at least one hike later this year rather than a cut, a materially more hawkish stance than markets had assumed a few months ago. June CPI, due 14 July, is the next major data point and will weigh heavily on that decision.

Looking ahead

Q2 earnings season starts to gather pace over the coming fortnight, with markets keen to see whether hyperscaler capex guidance and AI monetisation commentary can repair some of the damage done by the OpenAI and Meta headlines. Watch for continued volatility around SpaceX (SPCX), a source of broader market jitters since its record $75 billion IPO in June. The stock has been highly volatile, last trading in the $150s, comfortably above its $135 issue price but well off its post-listing high near $226. The Khamenei funeral concludes with burial in Mashhad on 9 July, after which attention returns to whether Washington and Tehran can turn the ceasefire into a durable settlement. June CPI on 14 July and the FOMC decision on 29 July are the two dates that matter most for rates markets from here.

Brent is currently trading near $70-73 and WTI around $68-69. Watch the Hormuz situation, the pace of AI capex commentary in Q2 earnings, and the US inflation data closely.

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