Earnings optimism helped European shares end the week on a bright note, and car giant DaimlerChrysler lent further support by its decision to stop pouring cash into troubled partner Mitsubishi Motors.
Stellar profits from Swedish truckmaker Volvo and forecast-beating earnings at telecoms equipment maker Ericsson added to perceptions that corporate results justified the leap of faith made by share prices in recent months.
Even so, Ericsson shed 4 percent as analysts lamented the lack of second-quarter outlook and advised clients to take some profits from the stock's 85 percent leap since the start of the year.
Investors, who had feared Europe's lagging economic recovery could cap earnings and sales growth this side of the Atlantic, have welcomed this week's clutch of solid numbers from German chipmaker Infineon, Swiss drug maker Novartis and food giant Nestle.
"Some companies reporting this week, such as Schneider and PPR have highlighted relatively positive growth trends in Europe," said Credit Suisse First Boston strategist Bill McQuaker. "Year to date there have been more than twice as many positive surprises as negative ones from corporate Europe," he added.
Investors will see a rush of earnings announcements next week, including figures from German engineering conglomerate Siemens, oil majors BP and Royal Dutch/Shell and drug makers GlaxoSmithKline and AstraZeneca.
The FTSE Eurotop 300 index of pan-European blue chips ended Friday 0.45 percent higher at 1,022.9 points, showing a rise of nearly one percent on the week, but failing to top a 20-month intraday peak of 1,028 points touched in March.
Markets remained wary of prospects of a summer increase in US interest rates after a surprisingly sharp 3.4 percent rise in March US durable goods orders added to a picture of sustained recovery in the economy and business investment.
"Equity markets have to decide about the trade-off. Is it good news via the profit impact or is it bad news because of the turn in the interest rate cycle?" asked Matthew Wickens, global economist at ABN AMRO.
Federal Reserve Chairman Alan Greenspan warned investors on Wednesday that higher interest rates loomed, but hinted the change would not be as soon as the market feared, as inflationary pressures were not yet building.
The narrower DJ Euro Stoxx 50 index rose 0.6 percent to 2,894.2 points as the DAX added 1.1 percent, and the CAC 40 was 0.7 percent firmer. The FTSE 100 ended flat, but the Swiss blue-chip index gained 0.5 percent.
Shares in DaimlerChrysler rallied 5.7 percent after it scrapped plans for a bailout of Mitsubishi after failing to reach a deal with other partners and said it may sell its 37-percent holding in the loss-making firm.
Europe's auto sector hit its highest level since September 2002. France's Renault gained 2.5 percent after Deutsche Bank raised its price target.
Volvo, the world's second-biggest truckmaker, jumped 4 percent after its first-quarter profits almost quadrupled, comfortably beating expectations.
Other bright spots included Adecco, up 5.6 percent after the Swiss jobs firm named a new finance chief in a drive to restore investors' confidence after accounting woes shattered its credibility, even though it said nothing about when its twice-delayed results would be published.
Tech stocks were a pocket of strength, with UK software firm Sage Group up 4 percent after the world's largest software maker Microsoft reported a strong revenue increase. France's Dassault Systemes rose 1.8 percent.
Dutch photocopier and printer maker OCE rallied 6.5 percent after industry giant Xerox said it would deliver a 2004 profit near the higher end of its forecasts.
Elsewhere in the sector, leading IT consultancy Capgemini added four percent despite denying market talk that it might sell its US assets, as speculation surfaced again that the loss-making company could be a takeover target.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to