GLOBAL MARKETS-Stocks gain after weak ADP, gilt yields surge on finance minister worries

Global stocks were roughly unchanged after U.S. data showed a surprisingly weak reading on the labor market while British government bond yields surged on growing speculation about the future of the country's finance minister. The ADP National Employment Report showed private payrolls dropped by 33,000 jobs last month after a downwardly revised 29,000 increase in May and well below the 95,000 increase expected by economists polled by Reuters.

The data comes ahead of Thursday's government payrolls report, although there is little, if any, correlation between the two. Market expectations for a July rate cut by the U.S. Federal Reserve climbed to just over 27% after the data, up from 20.7% in the prior session, according to CME's FedWatch Tool.

"I take it as a mixed bag. On one hand, the wage is still strong, which is terribly important to the U.S. economy. On the downside, if this isn't seasonality, this is the beginning of a long-term trend in white collar jobs that'll spill over into the total labor market," said Ross Mayfield, investment strategist at Baird in Louisville, Kentucky. On Wall Street, the S&P 500 and Nasdaq were modestly higher, buoyed in part by a bounce in Tesla after the stock dropped 5.3% on Tuesday. Tesla shares were last up 4.5% after the electric automaker posted its quarterly deliveries.

The Dow Jones Industrial Average fell 41.48 points, or 0.09%, to 44,453.72, the S&P 500 rose 13.84 points, or 0.22%, to 6,211.70 and the Nasdaq Composite rose 138.79 points, or 0.69%, to 20,341.01. MSCI's gauge of stocks across the globe rose 1.39 points, or 0.15%, to 918.79 and was on track for its fourth gain in the past five sessions, while the pan-European STOXX 600 index rose 0.09% as investors looked for signs of trade deals ahead of U.S. President Donald Trump's July 9 tariff deadline.

Longer-dated U.S. Treasury yields rose, with the benchmark U.S. 10-year note up 4.8 basis points to 4.297%, while the shorter-end was lower after the ADP data. The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 0.9 basis points to 3.768%.

British government bond yields surged, at one point jumping nearly 23 basis points, the most since October 2022, after finance minister Rachel Reeves appeared visibly distressed in parliament, a day after the government sharply scaled back plans to cut benefits. The yield on the 10-year government bond, or gilt, was last up 11.5 basis points at 4.572%.

Sterling tumbled 1.17% to $1.3584 and was on pace for its biggest daily percentage drop since April 7. The dollar index, which measures the greenback against a basket of currencies, rose 0.44% to 97.06 and was on track to snap a streak of nine straight declines, with the euro down 0.33% at $1.1766.

Trump said on social media on Wednesday that the U.S. has struck a trade deal with Vietnam. He had previously said he was not considering extending the deadline for countries to negotiate trade deals, even as negotiations with top trade partner Japan failed to make headway, although he expected a deal with India. Investors were also watching for signs of progress in Trump's massive tax and spending bill - which is expected to add $3.3 trillion to the national debt, slash taxes and reduce social safety net programs - as it now heads to the House of Representatives. Republican leaders set an initial procedural vote on the bill at 1300 GMT.

U.S. crude ticked up 0.03% to $65.47 a barrel and Brent rose to $67.23 per barrel, up 0.18% on the day as Iran suspended cooperation with the U.N. nuclear watchdog. But a surprise build in U.S. crude supplies limited gains.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)