Global tech stocks rally as US jobs data cools rate fears

Technology stocks climbed in global markets Friday after softer-than-expected US employment data pushed bond yields lower and reduced expectations for further Federal Reserve rate hikes.

Technology stocks rose in global markets Friday after softer-than-expected US jobs data reduced expectations for further Federal Reserve interest rate increases.

"The June payrolls report challenges the narrative that the Fed needs to keep hiking," said Sarah Lin, equity strategist at Edgen. "Markets are now pricing a lower probability of a rate move in July."

Treasury yields fell after the report, with short-term maturities leading the decline as traders pared bets on further tightening. Gold rose more than 1% and was headed for its first weekly gain in five, reflecting the broader shift in rate expectations across asset classes.

The Nasdaq Composite ended lower Thursday but global technology shares rebounded Friday as investors rotated back into growth sectors. The softer labor market data reduces the risk of a hawkish surprise at the Fed's July meeting, supporting valuations for technology stocks that are most sensitive to interest rate expectations. Lower rates improve the present value of future earnings for high-growth companies, a dynamic that has historically driven sector outperformance during easing cycles.

The rally extended across Asian and European markets, with semiconductor and software stocks leading gains. The shift in rate expectations also lifted currencies in emerging markets that had been under pressure from a stronger dollar earlier in the year.

The data comes ahead of the Fed's next policy decision on July 29, where officials are now more likely to hold rates steady. Markets will watch consumer price data due later this month for further confirmation that inflation is cooling alongside the labor market.

This article is for informational purposes only and does not constitute investment advice.