European stocks rallied for a second week, closing at their highest level in almost five years, as the European Central Bank (ECB) cut its interest rate and a US jobs report bolstered confidence in the world’s largest economy.
UBS AG and Deutsche Bank AG both surged by more than 8 percent after reporting profit that exceeded analysts’ estimates. BP PLC, Europe’s second-largest oil company, and Adidas AG, the world’s second-biggest sporting goods maker, climbed after posting quarterly results that beat forecasts.
The STOXX Europe 600 Index rose 1.7 percent this week to 301.04, its highest level since June 2008. The equity benchmark has rallied 7.6 percent so far this year boosted by company earnings that beat analysts’ estimates and confidence that central banks will add stimulus to support economic growth.
“We are trying to balance on one side the [European] Central Bank’s actions and on the other side the numbers that are being released,” Lutetia Capital co-chief executive officer Fabrice Seima said in Paris. “The US economy is in a pretty positive situation. The underlying and structural trend is one of positive sentiment in the US and we believe that is here to stay.”
The ECB cut its benchmark interest rate by 25 basis points to a record low of 0.5 percent as predicted by 45 of the 70 economists in a Bloomberg survey. After the decision, ECB President Mario Draghi said at a press conference in Slovakia that “our monetary policy stance will remain accommodative for as long as needed.”
In the US, the US Federal Reserve said it will continue to buy US$85 billion of bonds a month and will increase or reduce purchases if economic conditions change. The US Federal Open Market Committee made the comments following a two-day meeting.
Stocks surged on the final day of trading after a report showed that the US economy added 165,000 workers last month and a revised 138,000 in March.
National benchmark indices advanced in 16 of the 18 western European markets over the week. The UK’s FTSE 100 added 1.5 percent, France’s CAC 40 increased 2.7 percent and Germany’s DAX jumped 3.9
Italy’s FTSE MIB Index gained 2.2 percent as new Italian Prime Minister Enrico Letta formed a government of politicians from his Democratic Party, former Italian prime minister Silvio Berlusconi’s People of Liberty party and supporters of Letta’s predecessor, Mario Monti.
UBS rose 8.9 percent to a two-year high as Switzerland’s largest bank reported first-quarter net income of SF988 million (US$1.06 billion) because of higher revenue at the investment bank and the wealth-management business.
Deutsche Bank surged 13 percent after Germany’s biggest bank reported a net income of 1.65 billion euros (US$2.2 billion) for the first three months of the year. That exceeded the 1.21 billion euro average estimate of six analysts surveyed by Bloomberg.
BP gained 3.8 percent after the international oil company reported first-quarter earnings — adjusted for one-off items and inventory changes, of US$4.2 billion — because of an improved performance at its fuel trading business. The average analyst estimate had called for earnings of US$3.2 billion.
BG Group PLC shares jumped 8.1 percent, while Adidas climbed 8.1 percent to the highest price since 1995 after reporting first-quarter profit of 308 million euros. The sports firm also said its gross margin widened to a record high.
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
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
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],”
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts