European stocks posted their biggest weekly drop since June amid concern US President Barack Obama and Congress would fail to agree on a new budget, triggering US$607 billion of automatic tax increases and spending cuts.
The STOXX Europe 600 Index dropped 2.7 percent to 262.86 this week, erasing its advance since the European Central Bank authorized an unlimited bond-buying program in September. The gauge has lost 4.3 percent since Obama won a second term on Nov. 6 amid concern that the president and Republican lawmakers will fail to avert a package of deficit-cutting measures.
“The way to play the fiscal cliff is to be very cautious in the short term,” Stewart Richardson, chief investment officer at RMG Wealth Management LLP, said on Bloomberg Television in London this week. “The day after the election we saw another bad down day in equities and that gave us a technical signal that markets were vulnerable to the downside. We have seen that movement follow through this week.”
Stocks have tumbled around the world on concern that the US fiscal cliff will push the world’s largest economy into a recession at the beginning of next year.
European stocks extended their selloff this week as Israel bombed the Gaza Strip. Hamas’ armed wing, the al-Qassam Brigades, said that it fired rockets at Jerusalem and Tel Aviv. Crude oil erased its slide this week.
National benchmark indexes fell in every Western European market except Greece and Iceland. France’s CAC 40 lost 2.4 percent, the UK’s FTSE 100 slid 2.8 percent and Germany’s DAX declined 3 percent. Spain’s IBEX 35 Index slipped 0.6 percent amid speculation the country would soon request a bailout from the EU.
A report from the EU’s statistics office on Thursday showed that the eurozone slipped back into a recession in the third quarter as governments imposed tougher austerity measures to narrow their fiscal deficits. GDP slipped 0.1 percent, its second consecutive quarter of contraction.
Separate releases showed that industrial production in the currency zone dropped the most since 2009 in September, Greece’s economy contracted for a 17th straight quarter and jobless claims rose at the fastest pace in more than a year in the UK.
More than 60 companies on the STOXX 600 were scheduled to report earnings results this week. Of those that have posted results since Oct. 9, 51 percent have exceeded analysts’ profit forecasts, according to data compiled by Bloomberg.
BUSINESS UPDATE: The iPhone assembler said operations outlook is expected to show quarter-on-quarter and year-on-year growth for the second quarter Hon Hai Precision Industry Co (鴻海精密) yesterday reported strong growth in sales last month, potentially raising expectations for iPhone sales while artificial intelligence (AI)-related business booms. The company, which assembles the majority of Apple Inc’s smartphones, reported a 19.03 percent rise in monthly sales to NT$510.9 billion (US$15.78 billion), from NT$429.22 billion in the same period last year. On a monthly basis, sales rose 14.16 percent, it said. The company in a statement said that last month’s revenue was a record-breaking April performance. Hon Hai, known also as Foxconn Technology Group (富士康科技集團), assembles most iPhones, but the company is diversifying its business to
Apple Inc has been developing a homegrown chip to run artificial intelligence (AI) tools in data centers, although it is unclear if the semiconductor would ever be deployed, the Wall Street Journal reported on Monday. The effort would build on Apple’s previous efforts to make in-house chips, which run in its iPhones, Macs and other devices, according to the Journal, which cited unidentified people familiar with the matter. The server project is code-named ACDC (Apple Chips in Data Center) within the company, aiming to utilize Apple’s expertise in chip design for the company’s server infrastructure, the newspaper said. While this initiative has been
GlobalWafers Co (環球晶圓), the world’s No. 3 silicon wafer supplier, yesterday said that revenue would rise moderately in the second half of this year, driven primarily by robust demand for advanced wafers used in high-bandwidth memory (HBM) chips, a key component of artificial intelligence (AI) technology. “The first quarter is the lowest point of this cycle. The second half will be better than the first for the whole semiconductor industry and for GlobalWafers,” chairwoman Doris Hsu (徐秀蘭) said during an online investors’ conference. “HBM would definitely be the key growth driver in the second half,” Hsu said. “That is our big hope
The consumer price index (CPI) last month eased to 1.95 percent, below the central bank’s 2 percent target, as food and entertainment cost increases decelerated, helped by stable egg prices, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. The slowdown bucked predictions by policymakers and academics that inflationary pressures would build up following double-digit electricity rate hikes on April 1. “The latest CPI data came after the cost of eating out and rent grew moderately amid mixed international raw material prices,” DGBAS official Tsao Chih-hung (曹志弘) told a news conference in Taipei. The central bank in March raised interest rates by