European stocks posted the biggest weekly slide in 13 months as US Federal Reserve Chairman Ben Bernanke said the central bank might pare bond purchases, Greek wrangling threatened to fracture the government and China’s cash crunch worsened.
The benchmark STOXX Europe 600 Index fell 3.7 percent to 280.4 this week as all 19 industry groups dropped. The gauge has declined for five straight weeks, the longest streak of losses since June 2011. It has retreated 9.7 percent since May 22 after Bernanke said the Fed could start to reduce quantitative easing (QE) if the US economy improves sustainably.
“The market was facing the cold turkey of less QE steroids and the result was a panic attack,” said Lorne Baring, managing director of B Capital SA in Geneva. “The result will be investors pushed back to looking at equity fundamentals instead of the central bank QE programs, which have been distorting markets.”
The VSTOXX Index, which measures the cost of using options to hedge against swings in the Euro STOXX 50, rallied 13 percent to 24.05, the highest since February.
In China, benchmark money-market rates climbed to records this week as the People’s Bank of China refrained from using reverse-repurchase agreements to address a cash crunch. The seven-day repurchase rate rose 2.7 percentage points to 10.77 percent, the highest in data going back to March 2003.
As interbank borrowing costs surged, a report showed China’s manufacturing shrank at a faster pace this month. The preliminary reading of 48.3 for a purchasing managers’ index released by HSBC Holdings PLC and Markit Economics compared with the 49.1 median estimate in a Bloomberg survey of economists.
Greek Prime Minister Antonis Samaras lost one of his two coalition partners as the Democratic Left party’s ministers quit over his closure of state broadcaster ERT, sparking concern about the government’s stability. Without the Democratic Left’s 14 lawmakers, the alliance between Samaras’ New Democracy and the Socialist Pasok party would control just 153 seats in the 300-seat parliament.
“It feels like everyone is packing up everything they can,” said Luis Benguerel, a trader at Interbrokers in Barcelona. “People just want out. We’ve spent years patching up holes in China rather than reforming that economy. One day it will just blow up. And the last thing we need is a resumption of the sovereign risk in Europe.”
National benchmark indices fell in all of the 18 western European markets this week, except Iceland. The UK’s FTSE 100 fell 3.1 percent, France’s CAC 40 lost 3.9 percent, Germany’s DAX declined 4.2 percent and Greece’s ASE plunged 9.7 percent.
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