TLDR
- The STOXX 600 and DAX both hit all-time highs on Friday, with the STOXX 600 on track for its best weekly gain in over a month
- A softer-than-expected US jobs report pushed back expectations of a near-term Federal Reserve rate hike
- ECB President Christine Lagarde said inflation and growth risks are becoming more balanced, easing pressure on further hikes
- Siemens led DAX gains after Kepler Cheuvreux upgraded the stock to “hold” from “reduce”
- L’Oreal was among the worst performers after J.P. Morgan flagged a weaker second half outlook
European stocks pushed to fresh record levels on Friday, capping a strong week as cooler US labor market data and calmer central bank rhetoric lifted investor confidence.
The pan-European STOXX 600 briefly hit an all-time high during the session, trading up around 0.2% at 649.86 points. Germany’s DAX also touched a record, gaining 0.5% on the day. On the week, the STOXX 50 rose 2.3% and the STOXX 600 added 1.9% — its strongest weekly performance in about a month.
The rally was broad-based, with technology, industrials, banks, automakers, and utilities all posting gains.
US Jobs Data Takes Centre Stage
The main catalyst for the move was Thursday’s US payroll report, which came in below expectations. That data led traders to dial back bets on a Federal Reserve rate hike at the September meeting.
BREAKING: The US economy adds 57,000 jobs in June, well below expectations of 114,000.
The unemployment rate fell to 4.2%, below expectations of 4.3%.
May's jobs number was also revised down by -43,000 jobs.
The labor market remains in a volatile situation.
— The Kobeissi Letter (@KobeissiLetter) July 2, 2026
Before the report, markets were pricing in more than a 60% chance the Fed would raise rates in September, driven partly by early comments from newly appointed Fed Chair Kevin Warsh. After the data, expectations shifted toward a hold until at least October.
A less aggressive Fed matters for European markets. It eases upward pressure on global borrowing costs and reduces the flow of capital away from the euro zone toward higher US yields.
ECB Rhetoric Adds to the Calm
European Central Bank President Christine Lagarde added to the positive tone at the ECB’s annual forum in Sintra, Portugal. She said risks to euro zone inflation and economic growth are becoming more balanced — a mild shift in language that markets read as less pressure to keep hiking.
Earlier in the week, euro zone inflation data for June came in below expectations. Traders now price in a total of just 23 basis points of ECB rate hikes for the rest of the year.
Progress in US-Iran peace talks also helped, pulling oil prices lower and easing supply chain pressures for European companies.
Stock Movers
Siemens was the standout gainer on the DAX, jumping around 1.7% to 1.8% after Kepler Cheuvreux upgraded the stock to “hold” from “reduce.”
Chip stocks also performed well. Soitec and Aixtron each gained 4.1%, while BE Semiconductor added 3.6%. Tech stocks had already logged their biggest quarterly gain since 2001 earlier in the week, driven by the AI-related global rally.
French benefits firm Pluxee rose 5.3% after posting a smaller-than-expected drop in third-quarter organic sales.
On the downside, L’Oreal fell around 2.6% after J.P. Morgan said it expects a weaker second half for the cosmetics company. Kering also dropped around 1.9%.
Defence stocks edged higher following reports of Russia’s deadliest strike on Ukraine this year, with investors anticipating increased defence spending.
In London, the FTSE 100 fell 0.3%, weighed by its heavy commodity exposure. Pirelli gained 2% on reports of stake interest from Czech businesses, while Auto1 Group rose 2% after J.P. Morgan added it to its positive catalyst watch list.
Trading volumes were expected to be thin due to a US public holiday.
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