US stocks brushed off multiple threats to global economic growth this week, especially sharply rising oil prices, to close out a solid first quarter on Friday.
The year’s first three months ended officially on Thursday and the returns were good: The Dow Jones Industrial Average was up 6.4 percent, while the S&P 500 added 5.4 percent and the NASDAQ Composite 4.8 percent.
Another day of modest gains on Friday took all three indices to just shy of new highs in their two-year bull run: The Dow ended the week at 12,376.72, the S&P at 1,332.41, and the NASDAQ at 2,789.60.
Photo: AFP
The first quarter was rocky, but uprisings across the Arab crescent that left two venerable leaders ousted and sent oil prices skyrocketing left little trace on the markets.
Neither did the massive earthquake-tsunami double punch that shocked Japan on March 11, leaving more than 28,000 dead or missing and forcing shutdowns in key industries.
Instead, a steady flow of modestly positive data for the economic recovery has fed the bulls.
Exports are growing steadily and data released on Friday showed another drop in the US unemployment rate, to 8.8 percent. That confirmed that the private sector is adding jobs at a steady pace.
The number of first-time claims for unemployment insurance payments dropped to a seasonally adjusted 388,000 in the week ending on Saturday last week, from an upwardly revised 394,000 the week before, the US Department of Labor said on Thursday.
Meanwhile, a key determinant of the US Federal Reserve’s interest rate-setting policy, core inflation, remains subdued.
So few expect that US rates will rise anytime soon, even as the European Central Bank appears poised to push up rates there.
For the first quarter, most sectors moved in tandem with the key indices. However, tech stars were notably absent from the run: Google, Microsoft, Amazon, Intel and Cisco were all down for the period, and it was mainly Apple and Oracle that kept the NASDAQ above water.
For the week to Friday, investors also dismissed the fiscal fate of Europe’s most troubled economies — Greece, Portugal, Ireland and Spain.
Merger and acquisition activity was the focus instead: Canadian firm Valeant Pharmaceuticals made an unsolicited US$5.7 billion cash bid for biotech firm Cephalon.
General Electric announced it was buying French group Converteam, which specializes in electrification and automation equipment, for US$3.2 billion.
International Paper will pay US$423 million for a stake in an Indian paper company.
And topping off the week, US bourse operators NASDAQ and IntercontinentalExchange made a hostile bid for NYSE Euronext, which could sabotage NYSE’s plan to merge with German powerhouse Deutsche Bourse.
However, amid the bullishness, April 1 came in with no-joke warnings over economic weaknesses, pointing to stagnant wages and the possible double-dip recession in the housing market.
“The biggest threat to the long-term health of the economy would be a slowdown in payrolls,” analysts at Briefing.com said. “If job growth suddenly slows, income growth will undoubtedly suffer and consumption growth will weaken along with it.”
Wells Fargo Securities also issued a reality-check.
“While these [job] reports are encouraging, consumer confidence painted a far more cautious picture,” they warned. “Consumer confidence dropped sharply in March to its lowest level since December ... Rising gasoline prices and uncertainty on Japan and the Middle East likely helped drive the significant decline.”
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day