Though the week started on a low note, with news of poor second quarter earnings’ and concerns over rising borrowing costs in Italy and Spain, it finished in a positive note as worries over the future of euro was put to rest by European Central Bank President, Mario Draghi.
The FTSE Eurofirst 300, which shot up 2.4 per cent on Thursday, went up further on Friday. Wall Street’s S&P 500 went up by nearly 2 per cent, its best single day performance in four weeks. Following the trend the dollar index registered 1.6 per cent gain this week. The FTSE All-World equity index rose 1.9 per cent.
In yet another positive development, Standard & Poor reaffirmed the AAA status on UK’s sovereign debt. The rating agency expects the government to carry out most of its fiscal consolidation program. The euro (went up by 0.2 per cent) and the Spanish and Italian bonds bounced back on Thursday, and gained modestly on Friday. Meanwhile, Madrid’s 10-year borrowing costs came down by 20 basis points to 6.71 per cent. Rome’s borrowing costs too fell by 14bp to 5.92 per cent.
The second-quarter GDP data for the US revealed that the country’s economy grew at a modest 1.5 per cent on an annual basis. The figure was along expected lines, however, it didn’t raise hopes of the Federal Reserve injecting further monetary stimulus. Asian-markets performed well on Friday and contributed to the global rally. Samsung Electronics performed well and Seoul’s Kospi index went up by 2.6 per cent. The big disappointment of the week was Facebook. The social media giant’s shares touched a new low since its public offering in May.
Currency Movement Last Week
The Euro which opened at 1.2245 against the US dollar, last week, was down -0.71% closing at 1.2159. Likewise, the US dollar which opened at 79.19 against Japan’s yen was down -0.90% closing at 78.48. The GBP and AUS dollar went up marginally against the US dollar. While the GBP was up +0.30% against US dollar the AUS dollar rose by +1.46%.