European equities posted a weekly gain, rising to a 23-month high, as German investor confidence climbed to the highest in two-and-a-half years and US lawmakers voted to temporarily suspend the government’s borrowing limit.
The STOXX Europe 600 Index added 0.9 percent to 289.72 this week, snapping two weeks of losses to close at the highest level since Feb. 18, 2011. The gauge has advanced 3.6 percent this year as US lawmakers agreed on a budget deal averting spending cuts and tax increased that had threatened to push the world’s biggest economy into a recession.
“Some of the dark clouds over the market are starting to dissipate,” Henk Potts, as an equity strategist at Barclays PLC in London, said in a phone interview this week. “It has reassured a lot of investors, which means we are able to start looking again at the cheap valuations and bright corporate picture.”
About 60 percent of western European companies to have reported results since Jan. 8 exceeded analysts’ earnings estimates. Profits at companies in the STOXX 600 are forecast to grow 9.2 percent this year, projections compiled by Bloomberg show.
In Germany, the ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations climbed to 31.5 this month from 6.9 last month, signifying improved confidence.
A measure of euro-area services and manufacturing output also contracted at a slower pace this month than economists had estimated. A composite index based on a survey of purchasing managers in both industries rose to 48.2 this month from 47.2 last month, Markit Economics said. A reading below 50 indicates that activity shrank.
The European Central Bank said financial firms would repay more of their emergency three-year loans than forecast in another sign the region’s debt crisis was abating.
A total of 278 financial institutions will return 137.2 billion euros (US$185 billion) on Wednesday, the first opportunity for early repayment of the initial three-year loan, compared with the median projection of 84 billion euros in a Bloomberg survey of economists.
National benchmark indexes rose in 16 of the 18 western European markets this week. France’s CAC 40 added 1 percent and Germany’s DAX gained 2 percent. The UK’s FTSE 100 Index advanced 2.1 percent even as Britain’s economy shrank a higher-than-expected 0.3 percent in the fourth quarter.
UNDERESTIMATED: The agency said that as its previous forecast was guided by the SARS crisis, it did not adequately account for disruptions caused by the pandemic The nation’s economy might grow just 1.67 percent this year squarely on the back of government expenditure and private investment, as exports and consumer spending have stalled, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. The forecast is a sizeable retreat from an estimate of 2.37 percent growth made in February before the COVID-19 outbreaks became a pandemic. “The previous forecast was guided by the SARS crisis in 2003 and therefore underestimated the ongoing pandemic, which is hitting economic activity hard at home and abroad,” DGBAS Minister Chu Tzer-ming (朱澤民) told a media briefing in Taipei. The agency now expects exports
‘SUSCEPTIBLE’: The timing of an intervention, rather than the amount of money injected to the market, is more important, the deputy minister of finance said The National Stabilization Fund would remain on stand-by to shore up the local bourse until the COVID-19 pandemic has subsided worldwide, Deputy Minister of Finance Frank Juan (阮清華) said yesterday. Although Taiwan has stopped the virus’ spread, the fund would remain active in light of fragile financial markets across the world, said Juan, the state-run fund’s executive secretary. The government activated the fund on March 20 after the TAIEX slumped from 12,000 points to 8,600 in a short period amid a panic selloff. The main board has since recovered, yesterday closing at 10,997.21 points on turnover of NT$180.767 billion (US$6.03 billion), Taiwan
Domestic banks saw first-quarter net profits from their Hong Kong branches shrink 25 percent on an annual basis to NT$4.8 billion (US$159.83 million), the first drop in the past four years, due to higher loan-loss provisions and lower interest income, Financial Supervisory Commission data showed. Local banks’ branches in the financial hub saw interest income fall after the Hong Kong Monetary Authority in March lowered its base interest rate to 0.86 percent, compared with 2.75 percent a year earlier, the data showed. Those branches set more loan-loss provisions out of concerns that some loans might turn sour due to the COVID-19 pandemic
‘EXTERNAL VULNERABILITY’: The city-state’s economy in the first quarter shrank 4.7 percent quarterly due to worsening external demand outlook amid the pandemic Singapore’s embattled economy could shrink by as much as 7 percent this year, which would be the worst reading since independence in 1965, with the government saying yesterday that the COVID-19 pandemic had throttled the key export sector. The Singaporean Ministry of Trade and Industry’s forecast — which was a downgrade from the 4 percent contraction predicted in March — came as official data showed that the economy shrank 0.7 percent year-on-year in the first three months of the year, while it contracted 4.7 percent from the previous quarter. The ministry said the new estimate was made “in view of the deterioration