Le Pen wins first round, Nike slumps 20%

Nike's stock plunged nearly 20% after forecasting a surprise revenue drop for fiscal 2025. The euro climbed to a two-week high following the first round of French elections, where the far-right National Rally party led with around 34% of the vote. Despite the RN's lead, political uncertainty remains as the final outcome will depend on upcoming negotiations and potential alliances.

Equities

On Friday, the FTSE 100 fell 0.2%, marking its first monthly decline in four months but achieving its fourth consecutive quarterly gain. The FTSE 250 also dropped 0.2%, recording weekly and monthly losses. The UK economy grew by 0.7% in the first quarter, surpassing the expected 0.6% growth. This data added to concerns over potential interest rate cuts by the Bank of England.

Energy stocks gained 0.7% due to higher oil prices, while the personal goods sector declined by 2.4%, impacted by Telsey Advisory Group lowering Burberry’s target price from 1300p to 1000p. JD Sports Fashion dropped 5.4%, hitting the bottom of the FTSE 100, influenced by Nike's forecast of a surprise revenue decline in 2025.

In the US, stocks closed lower as early gains dissipated. The S&P 500 dropped 0.41%, the Nasdaq Composite fell 0.71%, and the Dow Jones Industrial Average dipped 0.11%. Nike had its sharpest one-day fall in over two decades, plummeting 19.98% after projecting a revenue drop for fiscal 2025, affecting the broader consumer discretionary sector. Infinera's stock surged 15.78% following Nokia’s announcement of a $2.3 billion acquisition deal.

The presidential debate between Joe Biden and Donald Trump added political uncertainty, which weighed on investor sentiment. Treasury yields reversed early losses, ending higher and putting pressure on some megacap stocks.

Forex & Commodities

The euro saw a significant rise since forex markets reopened on Sunday evening, reaching a two-week high of $1.076175, following the first round of voting in France's general elections. The far-right National Rally (RN) party, led by Marine Le Pen, secured around 34% of the vote, slightly below some poll projections. Despite the RN's lead, the outcome of the runoff remains uncertain, influencing investor sentiment and the euro's performance.

The US dollar slipped after data showed that inflation in the U.S. had subsided in May. The U.S. personal consumption expenditures (PCE) price index remained unchanged last month, bolstering expectations that the Federal Reserve might start cutting interest rates this year. Initially, the dollar fell against the yen, a currency pair highly sensitive to US economic data due to its correlation with Treasury yields. However, it recovered to trade flat, ending slightly up at 160.815 yen after earlier hitting a 38-year high of 161.27 yen. The dollar posted monthly and quarterly gains against the yen of approximately 1.9% and 5.9%, respectively.

Sterling saw minor fluctuations in June, dropping nearly 1% for the month. The currency's future hinges on the upcoming UK general elections and the new government's economic plans. The uncertainty around these elections has kept investors cautious.