Stocks sell off, dollar gains as Trump plans 25% tariffs on Japan, South Korea

NEW YORK – Major stock indexes declined while the dollar strengthened on Monday as US President Donald Trump unveiled sharply higher US tariffs on goods from Japan, South Korea, and other countries in the latest development in the US trade war.

Longer-dated US Treasury yields rose.

Trump on Monday began telling trade partners, including Japan and South Kore,a that the higher US tariffs will start August 1.

Trump in April capped all of the so-called reciprocal tariffs with trading partners at 10% until July 9 to allow for negotiations. Only two agreements, with Britain and Vietnam, have been reached.

“Trade, inflation, and earnings are going to be the next three catalysts that will drive the market higher or lower, depending on how they unfold,” said Adam Sarhan, chief executive of 50 Park Investments in New York.

“But markets like certainty, and today’s news increases the level of uncertainty, hence the selloff,” he said.

Tariffs are expected to increase prices and to slow down growth, though uncertainty over the ultimate policies may be a bigger drag as it leads businesses to postpone decisions.

S&P 500 companies next week are expected to begin reporting results on the second quarter.

The Dow Jones Industrial Average fell 422.17 points, or 0.94%, to 44,406.36, the S&P 500 fell 49.37 points, or 0.79%, to 6,229.98, and the Nasdaq Composite fell 188.59 points, or 0.91%, to 20,412.52.

US-listed shares of Japanese automotive companies fell, with Toyota Motor down 4% and Honda Motor off by 3.9%.

Also, electric vehicle maker Tesla shares fell 6.8% after CEO Elon Musk announced the formation of a US political party named the “American Party.”

MSCI’s gauge of stocks across the globe fell 5.80 points, or 0.63%, to 919.93. The pan-European STOXX 600 index closed up 0.44%.

The yield on benchmark US 10-year notes was last up 5.7 basis points on the day at 4.397%. The interest rate-sensitive two-year yield rose 1.9 basis points to 3.901%.

The dollar’s rise was most notable against the yen. It was up 1.09% at 146.130. The euro slipped 0.57% to USD 1.172, having rallied over 13% so far this year.

The dollar index, which measures the currency against six major counterparts, rose 0.517% to 97.467, reaching a one-week high.

Minutes of the last Federal Reserve meeting are also due this week. Investors are weighing how many times the Fed is likely to cut interest rates this year after jobs data for June on Thursday showed that employers added more jobs than economists had forecast.

Oil prices rose as signs of strong demand offset the impact of a higher-than-expected OPEC+ output hike for August and concerns about possible tariff impacts.

Brent crude futures rose USD 1.28, or 1.9%, to settle at USD 69.58. US West Texas Intermediate crude gained 93 cents or 1.4%, to settle at USD 67.93.

(Reporting by Caroline Valetkevitch in New York; Additional reporting by Lawrence White in London and Wayne Cole in Sydney; Editing by Cynthia Osterman and Stephen Coates)

Stocks, dollar dip as Trump passes spending bill, trade deal deadline nears

LONDON – Stocks slipped on Friday as US President Donald Trump got his signature tax cut bill over the line and attention turned to his July 9 deadline for countries to secure trade deals with the world’s biggest economy.

The dollar also fell against major currencies, with US markets already shut for the holiday-shortened week, as traders considered the impact of Trump’s sweeping spending bill that is expected to add an estimated USD 3.4 trillion to the national debt.

The pan-European STOXX 600 index fell 0.5%, with banks, mining-related stocks, and retailers among the top laggards.

US S&P 500 futures EScv1 edged down 0.6%, following a 0.8% overnight advance for the cash index to an all-time closing peak. Wall Street was closed on Friday for the Independence Day holiday.

Trump said Washington would start sending letters to countries on Friday specifying what tariff rates they would face on exports to the United States, a clear shift from earlier pledges to strike scores of individual deals before a July 9 deadline when tariffs could rise sharply.

Investors are “now just waiting for July 9”, said Tony Sycamore, an analyst at IG, with the market’s lack of optimism for trade deals responsible for some of the equity weakness in export-reliant Asia, particularly Japan and South Korea.

At the same time, investors cheered a surprisingly robust US jobs report on Thursday, sending all three of the main US equity indexes climbing in a shortened session.

“The US economy is holding together better than most people expected, which suggests to me that markets can easily continue to do better (from here),” Sycamore said.

Following Thursday’s close, the House narrowly approved Trump’s signature, 869-page bill, which averts the near-term prospect of a US government default but adds trillions to the national debt to fuel spending on border security and the military.

TRADE THE KEY FOCUS IN ASIA

Trump said he expected “a couple” more trade agreements, after announcing a deal with Vietnam on Wednesday to add to framework agreements with China and Britain as the only successes so far.

US Treasury Secretary Scott Bessent said earlier this week that a deal with India was close. However, progress on agreements with Japan and South Korea, once touted by the White House as likely to be among the earliest to be announced, appears to have broken down.

The US dollar index had its worst first half since 1973 as Trump’s chaotic roll-out of sweeping tariffs heightened concerns about the US economy and the safety of Treasuries, but had rallied 0.4% on Thursday before retracing some of those gains on Friday.

As of 1430 GMT it was down 0.1% at 96.94.

The euro added 0.2% to USD 1.1778, while sterling held steady at USD 1.3662 as British assets steadied following investor fright over the last two days at a tearful appearance by Finance Minister Rachel Reeves in parliament on Wednesday.

The US Treasury bond market was closed on Friday for the holiday, but 10-year yields rose 4.7 basis points (bps) to 4.34%, while the 2-year yield jumped 9.3 bps to 3.882%.

Gold firmed 0.4% to USD 3,336 per ounce, on track for a weekly gain as investors again sought refuge in safe-haven assets due to concerns over the US’s fiscal position and tariffs.

Brent crude futures fell 57 cents to USD 68.23 a barrel, while US West Texas Intermediate crude dropped 66 cents to USD 66.34, as Iran reaffirmed its commitment to nuclear non-proliferation.

(Reporting by Lawrence White in London and Kevin Buckland in Tokyo; Editing by Stephen Coates, Kim Coghill, Alexandra Hudson, Joe Bavier, and Alex Richardson)

Oil falls slightly ahead of expected OPEC+ output increase

CALGARY – Oil futures slipped slightly in thin holiday trading on Friday, as the market looked ahead to this weekend’s OPEC+ meeting and the likelihood that member countries will decide to raise output.

Brent crude futures settled down 50 cents, or 0.7%, at USD 68.30 a barrel while US West Texas Intermediate crude was down 50 cents, or 0.75%, at USD 66.50 just before 1300 EDT (1700 GMT). Trade was sparse due to the US Independence Day holiday.

Brent settled about 0.8% higher than last Friday’s close and WTI was around 1.5% higher.

Eight OPEC+ countries are likely to make another oil output increase for August at a meeting on Saturday in their push to boost market share. The meeting was moved forward a day to Saturday.

“If the group decides to increase its output by another 411,000 barrels per day (bpd) in August, as expected, for the fourth successive month, oil balance estimates for the second half of the year will be reassessed and will suggest accelerated swelling in global oil reserves,” said PVM analyst Tamas Varga.

“There seems to be some profit-taking on concerns that OPEC will raise production by more than expected,” said Phil Flynn, senior analyst with the Price Futures group.

He added that investors seem to be in wait-and-see mode, getting ready to react to OPEC’s move while also watching for implications of US President Donald Trump’s massive package of tax and spending cuts, which was set to be signed into law at a ceremony at the White House on Friday.

Crude prices also came under pressure from a report on US news website Axios, which said the United States was planning to resume nuclear talks with Iran next week, while Iranian foreign minister Abbas Araqchi said Tehran remained committed to the nuclear Non-Proliferation Treaty.

Meanwhile, uncertainty over US tariff policy was back in the spotlight as the end of a 90-day pause on higher levies approaches.

European Union negotiators have failed so far to achieve a breakthrough in trade negotiations with the Trump administration and may now seek to extend the status quo to avoid tariff hikes, six EU diplomats briefed on the talks said on Friday.

Separately, Barclays said it had raised its Brent oil price forecast by USD 6 to USD 72 a barrel for 2025 and by USD 10 to USD 70 a barrel for 2026 on an improved demand outlook.

(Reporting by Amanda Stephenson in Calgary, Robert Harvey in London, Mohi Narayan in New Delhi, and Florence Tan in Singapore; Additional reporting by Arathy Somasekhar in Houston;
Editing by Emelia Sithole-Matarise, Chizu Nomiyama, and Matthew Lewis)

Gold poised for weekly gain on dollar weakness, safe-haven demand

Gold prices rebounded on Friday and were heading for a weekly gain, helped by a retreat in the US dollar and safe-haven inflows, as US President Donald Trump’s deadline for trade deals loomed.

Spot gold was up 0.3% to USD 3,336.39 per ounce, as of 1211 GMT. The precious metal is up about 1.9% this week.

US gold futures gained 0.1% to USD 3,346.60.

The dollar index slipped 0.2% and was on track for a second week of decline, making gold less expensive for other currency holders.

“The apprehension about the fiscal situation in the US (after Trump’s sweeping tax-cut bill passed Congress) and the lingering uncertainty over the approaching July 9 deadline for the tariff issue has boosted safe-haven demand,” said Ricardo Evangelista, senior analyst at brokerage firm ActivTrades.

Trump announced that Washington will start sending letters to countries on Friday, marking a shift from earlier plans for individual trade deals. On April 2, he announced reciprocal tariffs of 10%-50%, but later reduced most to 10% until July 9 to allow for negotiations.

Meanwhile, Trump’s tax-cut legislation cleared its final hurdle in Congress on Thursday, making his 2017 cuts permanent, funding his immigration crackdown and adding new tax breaks promised during Trump’s 2024 campaign.

Data showed US job growth was unexpectedly solid in June, but nearly half of the increase in nonfarm payrolls came from the government sector, with private industry gains being the smallest in eight months as businesses battled rising economic headwinds.

“The latest US payroll data supports the case of a slowdown of the economy, but no standstill, slowing the pressure on the Fed to cut interest rates anytime soon,” said UBS commodity analyst Giovanni Staunovo.

Elsewhere, spot silver edged 0.2% higher to USD 36.9 per ounce and palladium eased 0.1% to USD 1,135.79. Platinum rose 1.5% to USD 1,387.54 per ounce and was heading for its fifth straight week of gains.

(Reporting by Brijesh Patel in Bengaluru, additional reporting by Ishaan Arora; Editing by Harikrishnan Nair and Vijay Kishore)

Investors eye tariff deadline as US stocks rally

NEW YORK – Investors will be keeping a close eye on tariff headlines out of Washington next week, as a temporary suspension of punitive import levies is set to expire. If that Wednesday deadline passes without an increase in trade tensions, it could prove positive for the markets.

Negotiators from more than a dozen major US trading partners are rushing to reach agreements with US President Donald Trump’s administration by July 9 to avoid even higher tariffs, and Trump and his team have kept up the pressure in recent days.

On Wednesday, Trump announced a deal with Vietnam that he says will impose a lower-than-promised 20% tariff on many Vietnamese exports. While the administration has teased a forthcoming deal with India, talks with Japan, the sixth-largest US trading partner and closest ally in Asia, appeared to hit roadblocks.

Investors have shifted from panicking about tariffs to relief buying, recently lifting the US stock market back to record highs, with corporate earnings and the US economy holding up better than many had expected through a period of dramatic policy change.

The S&P 500 has risen about 26% from April 8, when stocks bottomed following Trump’s draconian April 2 tariff announcement.

But much of the rally has been driven by retail market participants and corporate share buybacks, even as institutional investors have been more reticent.

Despite the S&P 500 making new highs, equity positioning is far below February levels as investors remain underweight stocks, according to Deutsche Bank estimates.

“This has definitely been a junkier rally, a more speculative rally,” Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management.

“In the last week or so, it’s been driven a lot more, I think, by retail than it has been by institutions. Institutional positioning is really just average,” she said.

While many factors are keeping investors cautious, including worries about US economic growth and lofty stock market valuations, getting past the tariff deadline without a major escalation in tensions would be one less thing to worry about in the near term, analysts said.

“I think that there may be some threats and saber-rattling, but I don’t really think that any of that now poses a major danger to the market,” said Irene Tunkel, chief US equities strategist, BCA Research.

Still, investors don’t expect the tariff deadline to put an end to trade tensions for good.

“I don’t view it necessarily as a hard deadline,” said Julian McManus, portfolio manager at Janus Henderson Investors.

“The 90-day pause itself was instituted because the markets were falling apart, and I think policymakers needed breathing room and time to try and negotiate these deals or find some kind of off-ramp,” he said.

Investors’ cautious approach to boosting equity exposure now is reminiscent of their behavior immediately after the pandemic market drop of March 2020, when allocations to stocks recovered more slowly than major market indexes, Deutsche Bank strategist Parag Thatte, said.

“It does mean that there is room for exposures to keep rising, which is a positive for equities all else equal,” Thatte said.

After a roller-coaster first half, the S&P 500 is entering a historically strong period. Over the past 20 years, July has been the strongest month for the benchmark index with an average return of 2.5%, according to a Reuters analysis of LSEG data.

Investors will also be keeping an eye on economic data – especially inflation numbers – and second quarter results in the coming weeks for clues to the health of the US economy, and the Federal Reserve interest rate outlook.

“We’re right at the point where institutions are going to have to decide one way or the other, do they believe the rally or not,” Morgan Stanley’s Shalett said.

(Reporting by Saqib Iqbal Ahmed; Additional reporting by Laura Matthews; Editing by Alden Bentley and Nick Zieminski)

US yields climb on strong jobs data; market prices out July rate cut

NEW YORK – US Treasury yields advanced on Thursday after data showed the world’s largest economy created more jobs than expected last month, supporting the Federal Reserve’s patient stance on cutting interest rates this year.

In afternoon trading, US two-year yields, which track interest rate expectations, rose 9.7 basis points (bps) to 3.888%, and up 14.6 bps for the week, its largest weekly rise since early April. The benchmark 10-year yield, on the other hand, gained 5.3 bps to 4.346%. On the week, the 10-year yield advanced 6.3 bps, on track for its largest weekly gain in roughly a month.

Volume has thinned, however, following the nonfarm payrolls report, with US bond markets closed on Friday for the July 4th holiday.

On the political front, Republicans in the US House of Representatives advanced President Donald Trump’s massive “One Big Beautiful Bill” toward a final yes-or-no vote on Thursday, overcoming internal party divisions over its cost.

The bill, if approved, would raise the debt ceiling by USD 5 trillion, which will allow the US Treasury to increase bill auction sizes in the coming weeks.

But Thursday’s jobs report was the market’s focus.

The report showed US nonfarm payrolls increased by 147,000 jobs last month after an upwardly revised 144,000 gain in May. Economists polled by Reuters had forecast payrolls rising 110,000 following a previously reported 139,000 gain in May.

The unemployment rate fell to 4.1% from 4.2% in May. Economists had expected the jobless rate to tick up to 4.3%.

The headline numbers, however, obscure weaker details of the report, analysts said.

Stan Shipley, fixed income strategist at Evercore ISI, pointed to state and local government employment accounting for 50% of the overall gain. He also added that private service job gains were only 68,000 and private goods producing jobs advanced just 6,000, while temporary employment slipped.

The odds of a July cut shrank to 4.7% after the jobs data, from about 25% before the report’s release. Chances of a September easing also dropped to 75%, compared with 98% just before.

There were only about 50 bps rate declines priced in 2025, from about 67 bps before the report.

“You look at it at the headline number level and conclude that the fears around the softer labor markets to this point have continued to be worse than the reality,” said Jim Baird, chief investment officer, at Plante Moran Financial Advisors in Southfield, Michigan.

“The job market appears to be hanging in there. I’d say that you have to look at the next layer of the data and when you see the pretty marked slowdown in job creation in the private sector, there is still a cautionary note there.”

The yield curve flattened after the data, with the spread between two-year and 10-year yields at 45.4 bps compared with 49.2 bps late Wednesday, as the bond market priced in a likely delay in Fed easing.

US Treasury Secretary Scott Bessent said if the Fed does not cut interest rates soon, any potential easing in September could be higher.

Other economic data on Thursday such as weekly jobless claims and services sector index showed a still solid economy. Initial claims fell to 233k in the last week of June, the lowest since mid-May, from 237,000 in the previous week, suggesting that the layoff rate remained low.

US services sector activity, on the other hand, picked up in June as orders rebounded, but employment contracted for the third time this year, underscoring the impact of policy uncertainty on businesses.

The Institute for Supply Management’s (ISM) non-manufacturing purchasing managers index (PMI) increased to 50.8 last month from 49.9 in May. Economists polled by Reuters had forecast the services PMI rising to 50.5.

(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Medha Singh in Bengalaru; Editing by Alex Richardson, Chizu Nomiyama, Nick Zieminski, and Cynthia Osterman)

S&P 500, Nasdaq close at records on jobs data; Nvidia market cap nears USD 4 trillion

NEW YORK – Wall Street rallied on Thursday to record closing highs, as chipmaker Nvidia rose closer to a USD 4 trillion valuation and a surprisingly strong US jobs report cheered investors, who shrugged off dimming chances for an interest rate cut this month.

The S&P 500 and Nasdaq closed at record highs, notching a third week of gains. The Dow closed up 0.77%, only 0.41% away from its own record.

Chipmaker Nvidia rose 1.3%, putting its market capitalization at USD 3.89 trillion. The company is close to overtaking Apple’s all-time record and becoming the world’s most valuable company in history.

Trading volume was light in a shorter session on the eve of Friday’s US Independence Day holiday.

“We are seeing a real bout of irrational exuberance; the stock market is very biased towards optimism,” said Kristina Hooper, Chief Market Strategist at Man Group in New York.

“But there’s some basis for it. I think there is some level of relief because the jobs report was not as weak as it could have been.”

The rally has been fueled by retail investors, who are largely ignoring the inflationary pressure on the horizon, uncertainty around tariffs and “are focused on the tangible, which is today’s jobs report,” she said.

The S&P 500 gained 51.94 points, or 0.83%, to 6,279.36 and the Nasdaq Composite gained 207.97 points, or 1.02%, to 20,601.10. The Dow Jones Industrial Average rose 344.11 points, or 0.77%, to 44,828.53.

Data showed nonfarm payrolls increased by 147,000 jobs last month, 33% more than the 110,000 jobs forecasted by economists polled by Reuters. Unemployment fell to 4.1% last month, a better result than the 4.3% expected.

Traders quickly priced out chances of an interest-rate cut in July, with the odds of a 25-basis-point reduction in September at 68%, according to CME Group’s Fedwatch tool, down from 74% a week ago.

After markets closed, Republicans in the US House of Representatives approved President Donald Trump’s massive tax-cut and spending bill, an expected outcome.

The legislation will add USD 3.4 trillion to the nation’s USD 36.2 trillion debt, according to the nonpartisan Congressional Budget Office, and will also push millions of Americans off health insurance.

Large tax cuts and increased government spending can boost demand in the economy. This can add inflationary pressure, especially when the economy shows signs of strength, such as the latest jobs report.

“Some data points, like the jobs report, are positive and charming. But if we just take a step back, the picture is not that great,” said Alex Morris, CEO of F/m Investments, which manages USD 18 billion in Washington, D.C.

For the week, the S&P 500 gained 1.72%, the Nasdaq rose 1.62%, and the Dow climbed 2.3%. The Russell 2000 Small Cap index rose 3.41%.

“It’s kind of perplexing,” Morris said. “This feels like that last bull rush before all of the data really comes together.”

Tripadvisor climbed 16.7% after the Wall Street Journal reported activist investor Starboard Value had built a stake of more than 9% in the online travel company.

Datadog jumped 14.9% after the cloud security firm was set to replace Juniper Networks on the S&P 500.

Markets closed at 1 p.m. ET. Trading volume on US exchanges was 10.85 billion shares, much lighter than the 17.82 billion average for the full session over the last 20 trading days.

(Reporting by Sabrina Valle In New York, Sruthi Shankar in Bengaluru; Editing by Pooja Desai and David Gregorio)

Gold falls 1% as strong US payrolls data douses rate cut hopes

Gold fell 1% on Thursday as stronger-than-expected US payroll data cemented expectations that the Federal Reserve is unlikely to cut interest rates as early as previously anticipated, denting the metal’s appeal.

Spot gold fell 0.9% to USD 3,328.63 per ounce as of 0200 p.m. EDT (1800 GMT), after falling over 1% earlier in the session.

US gold futures settled 0.4% higher at USD 3,342.9.

The dollar and US stock index futures rose after non-farm payrolls increased by 147,000 jobs last month, the Labor Department’s Bureau of Labor Statistics showed. Economists polled by Reuters had forecast payrolls rising 110,000.

A stronger dollar makes bullion more expensive for overseas buyers.

“The better than expected jobs number means we see a lesser likelihood of a Fed rate cut earlier than currently anticipated. As a result, the dollar strengthened, which is adding pressure to the gold market,” said David Meger, director of metals trading at High Ridge Futures.

“The key is the fact that the idea or possibility of a July rate cut is off the table.”

Investors are now pricing in 51 basis points of Federal Reserve rate cuts by the end of the year, starting in October, down from around 66 basis points expected prior to the report.

Non-yielding gold tends to perform well in a low-interest-rate environment.

On the trade front, an agreement between the United States and Vietnam was announced on Wednesday ahead of a July 9 deadline when US tariffs are set to take effect.

Meanwhile, Republicans in the US House of Representatives advanced Trump’s massive tax-cut and spending bill, estimated to potentially add USD 3.4 trillion to the nation’s debt, toward a final yes-or-no vote.

“As the indebtedness of the US continues to grow, investors might become more concerned about the US dollar, which should benefit gold in the longer-term,” said Carsten Menke, an analyst at Julius Baer.

Spot silver was up 0.7% at USD 36.84 per ounce, while platinum lost 3.1% to USD 1,374.89 and palladium shed 1.5% to USD 1,137.69.

(Reporting by Anushree Mukherjee in Bengaluru; Additional reporting by Sarah Qureshi; Editing by Philippa Fletcher, Tasim Zahid, and Cynthia Osterman)

Dollar gains after strong US jobs data stretches market hopes of Fed cut

NEW YORK – The US dollar rose against major currencies, including the yen, euro and Swiss franc on Thursday, after data showing the US economy created more jobs than expected, signalling that the Federal Reserve might take longer to cut interest rates.

The dollar strengthened 0.94% to 145.075 versus the Japanese yen and was up 0.39% to 0.7955 against the Swiss franc. The US currency is on track to notch a second consecutive session of gains against both safe-haven currencies.

The euro was 0.41% weaker at USD 1.175350. It is on track for the second straight day of losses.

US Labor Department data on Thursday showed that nonfarm payrolls increased by 147,000 jobs in June. Economists polled by Reuters had forecast a rise of 110,000. The report was published a day early because of the July 4 US Independence Day holiday.

“It will be very difficult for the Fed to cut rates in this environment, with the labor market so strong,” said Axel Merk, president and chief investment officer at Merk Hard Currency Fund in California. “The argument that Jerome Powell has made for the Fed to stay on the sidelines continues to hold.”

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.40% to 97.135, on track for two straight sessions of gains, although it is still near multi-year lows.

The rise in the dollar following the data was accompanied by an increase in US Treasury yields. The two-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 9.7 basis points to 3.789%. The yield on benchmark US 10-year notes rose 5.5 basis points to 4.348%.

Wall Street stock indexes gained, with the benchmark S&P 500 index and the Nasdaq hitting a fresh record high on the session.

“The US economy right now is on the roll to outperform through the rest of the year, that’s why we’re seeing such a strong response over the past three weeks in the equities,” said Joseph Trevisani, senior analyst at FX Street. “The dollar has weakened about 13% against the euro since February. A lot of that has been driven by speculation that the Fed will sooner or later cut rates.”

He said Thursday’s economic report had put an end to those expectations.

Market expectations that the Fed will leave rates unchanged at its July meeting rose to a 95.3% probability, up from 76.2% a day ago, according to the CME’s Fedwatch tool.

Republicans in the US House of Representatives passed President Donald Trump’s massive tax-cut and spending bill on Thursday, sending it to Trump to sign into law.

Treasury Secretary Scott Bessent said in a Bloomberg interview he expects a flurry of trade deals before the July 9 deadline, when the temporary pause of the so-called “Liberation Day” tariffs expires.

The US has lifted restrictions on exports to China for chip design software developers and ethane producers, a sign of easing trade tensions between the countries. The dollar strengthened 0.14% to 7.17 versus the offshore Chinese yuan.

The British pound rose after losing ground in the previous session following a selloff in gilts. British Prime Minister Keir Starmer’s office backed finance minister Rachel Reeves, easing concerns over her future. The pound strengthened 0.07% to USD 1.3646.

(Reporting by Chibuike Oguh in New York. Editing by Alex Richardson, Mark Potter, and Sharon Singleton)

Oil falls on signs of weak US demand ahead of key jobs report

Oil prices eased on Thursday, reversing gains from the previous session, on concerns over weak US demand after government data showed a surprise build in inventories in the world’s biggest crude consumer.

Brent crude futures fell 24 cents, or 0.35%, to USD 68.87 a barrel by 0044 GMT after gaining 3% on Wednesday. US West Texas Intermediate crude fell 24 cents, or 0.36%, to USD 67.21 a barrel after climbing 3.1% previously.

The US Energy Information Administration said on Wednesday domestic crude inventories rose by 3.8 million barrels to 419 million barrels last week. Analysts in a Reuters poll had expected a drawdown of 1.8 million barrels.

Gasoline demand dropped to 8.6 million barrels per day, prompting concerns about consumption in the peak US summer driving season.

Both benchmarks gained on Wednesday after Iran enacted a law suspending cooperation with the UN nuclear watchdog, raising concerns the lingering dispute over the Middle East producer’s nuclear program may once again devolve into armed conflict.

Additionally, the US and Vietnam reached a trade deal that sets 20% tariffs on many of the Southeast Asian country’s exports, giving investors a sense of greater economic stability on international trade which could flow into higher demand for oil.

The market will be watching the release of the key US monthly employment report on Thursday to shape expectations around the depth and timing of interest rate cuts by the Federal Reserve in the second half of this year, analysts said.

Lower interest rates could spur economic activity, which would in turn boost oil demand.

A private payrolls report on Wednesday showed a contraction for the first time in two year though analysts cautioned there is no correlation between it and the government data.

(Reporting by Nicole Jao; Editing by Christian Schmollinger)

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