Euro Drops as ECB Refuses Emergency Bond Buying

European stocks saw a significant drop last week, amid ongoing political uncertainty in France influencing market sentiment. The euro remained low, trading at $1.0700, as the European Central Bank decided against emergency bond purchases despite market pressures. The People's Bank of China held its one-year rate steady, countering expectations of a rate cut.

Equities

On Friday, the FTSE 100 experienced its fifth consecutive weekly decline, marking the longest weekly losing streak since March 2020. The index fell by 0.2%, continuing to feel the pressure from various geopolitical and economic uncertainties.

Tesco, the largest supermarket chain in Britain, saw its shares increase by 2.5%. This uptick came after Tesco reported a 4.6% rise in underlying quarterly sales in the UK and reiterated its financial forecasts for the year, signalling robust consumer demand and effective operational management.

Crest Nicholson's shares surged by 13.7%, topping the FTSE 250 performance list after rejecting a revised unsolicited proposal from Bellway valued at 650 million pounds.

The Nasdaq Composite managed to eke out a 0.12% increase, marking its fifth consecutive record-high close, benefiting significantly from the 14.5% jump in Adobe shares. This came after the company raised its annual revenue forecast, buoyed by robust demand for its AI-powered software solutions. Meanwhile, the S&P 500 saw a slight decline of 0.04%, ending its four-day streak of record closes, despite a weekly gain of more than 1%. The Dow Jones Industrial Average fell by 57.94 points or 0.15%.

Forex & Commodities

The euro lingered near a month-long low, influenced by political unrest in Europe and the lack of emergency support from the European Central Bank for French bonds, despite recent market turmoil. This scenario supported a firm dollar, with the dollar index holding steady at 105.54.

In the UK, the sterling was stable at $1.2681, ahead of the Bank of England's meeting on June 20, where inflation concerns are expected to prevent any interest rate cuts.

Gold prices rose, with spot gold reaching $2,332.55 per ounce, reflecting a weekly increase of 1.8%.

Brent crude and West Texas Intermediate both dropped by 0.4%, influenced by weaker consumer demand in the US and increased crude production in China. Despite this decline, oil prices had gained nearly 4% the previous week, supported by optimistic demand forecasts from OPEC+ and the International Energy Agency.