European equities ended with small losses in holiday-hit trade yesterday as speculation about faster US rate hikes weighed on investors, while French hotel operator Accor fell after a costly stake acquisition.
Accor fell 4.7 percent to 33.08 euros after it bought a nearly 30 percent stake in resort operator Club Mediterranee for 252 million euros ($302.5 million).
The deal values Club Med shares at 45 euros each -- a 31 percent premium over Thursday's closing price. Club Med's shares jumped 8.2 percent to 37.10 euros.
The FTSE Eurotop 300 index of pan-European blue chips eased 0.21 percent to 1,003.87 points while the narrower DJ Euro Stoxx 50 index was off 0.11 percent at 2,797.05 points.
Market sentiment was dominated by fears that inflationary pressures in the US could bring about sharp monetary tightening and put a brake on the world's largest economy.
Volume was light at about one billion euros, less than half the daily average, as activity remained muted with US financial markets closed for the state funeral of former president Ronald Reagan.
"I can't remember a quieter day. It's like pulling teeth," said David Buik of spread betting firm Cantor Index.
Despite indices closing lower, European markets racked up a fourth straight week of gains, rebounding from 2004 lows hit in May.
"We are advising clients to take whatever profits they have and bring down risks," said a Munich-based trader.
"Markets are just focusing on rates, terrorism and oil prices. Company profits have been solid, but there's a fear that these can't be sustained over next few quarters," he said.
Around Europe, the FTSE 100 was off 0.05 percent, Germany's DAX eased 0.2 percent and the CAC 40 shed 0.3 percent.
St. Louis Federal Reserve Bank President William Poole said Thursday that the Fed must raise rates faster than the market expects if inflation speeds up. He said that delaying Fed action would not help the US economy.
The Fed has held overnight interest rates at a 46-year low of 1 percent since last June, but it is widely expected to raise them by 25 basis points at its next meeting on June 29 and 30.
Next Tuesday's US consumer price report, which economists expect will show a monthly gain of 0.4 percent, will be closely watched by investors.
"A 25 basis points Fed Fund target hike is consensus, with concerns it could be as much as 50 basis points. However, following Fed Chairman Greenspan's widely discussed speech this week, expectations could change next week when the May CPI and PPI are released," JP Morgan strategists said in a note.
"Higher than expected inflation would be negative for equities -- investors are in no mood for surprises, in our opinion," they said.
Nokia rose 1.2 percent to 11.88 euros ahead of next week's launch of its first mainstream flip phone and a music player, as the world's top mobile phone maker attempts to claw back market share, which has been hit by its lack of new models.
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
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
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)