European stocks climbed this week as companies from Anheuser-Busch InBev NV to Bayer AG posted quarterly earnings that beat estimates and as the European Central Bank (ECB) said interest rates will remain low.
AB InBev, the world’s biggest brewer, jumped 11 percent, leading food-and-beverage stocks higher. Bayer paced gains among chemical makers as it surged 7 percent. Alcatel-Lucent SA soared 17 percent after quarterly profit exceeded projections and K+S AG posted its biggest weekly drop in more than 14 years as OAO Uralkali forecast that potash prices will plummet.
The STOXX Europe 600 Index advanced 1.8 percent to 304.15 this week. The equity benchmark rose every day this week, its longest winning streak since April. That pushed its valuation to 13.8 times estimated earnings, the highest since December 2009. More than 140 STOXX 600-listed companies reported earnings this week, according to data compiled by Bloomberg.
National benchmark indices rose in all 18 western European markets this week. The UK’s FTSE 100 advanced 1.4 percent, while France’s CAC 40 climbed 1.9 percent and Germany’s DAX Index added 2 percent.
“Investors have a far more positive outlook on European equities now than before as they are hoping the economy will oblige and show an improvement next year,” Hermes Sourcecap Ltd chief executive Andrew Parry said in a telephone interview. “Expectations for profit have already fallen so much that if a company is posting slightly better earnings on depressed estimates, that’s a welcome relief.”
Analysts have lowered their profit forecasts for companies listed on the STOXX 600 since the beginning of this year. Estimates have fallen 8.3 percent to 22.09 euros per share, according to data compiled by Bloomberg.
ECB President Mario Draghi on Thursday said interest rates in the eurozone will remain low for an extended period of time.
He also said there are indications that the combined economy of the currency bloc is stabilizing. The ECB and the Bank of England left their benchmark interest rates unchanged at 0.5 percent, as forecast in Bloomberg surveys.
IN THE AIR: While most companies said they were committed to North American operations, some added that production and costs would depend on the outcome of a US trade probe Leading local contract electronics makers Wistron Corp (緯創), Quanta Computer Inc (廣達), Inventec Corp (英業達) and Compal Electronics Inc (仁寶) are to maintain their North American expansion plans, despite Washington’s 20 percent tariff on Taiwanese goods. Wistron said it has long maintained a presence in the US, while distributing production across Taiwan, North America, Southeast Asia and Europe. The company is in talks with customers to align capacity with their site preferences, a company official told the Taipei Times by telephone on Friday. The company is still in talks with clients over who would bear the tariff costs, with the outcome pending further
A proposed 100 percent tariff on chip imports announced by US President Donald Trump could shift more of Taiwan’s semiconductor production overseas, a Taiwan Institute of Economic Research (TIER) researcher said yesterday. Trump’s tariff policy will accelerate the global semiconductor industry’s pace to establish roots in the US, leading to higher supply chain costs and ultimately raising prices of consumer electronics and creating uncertainty for future market demand, Arisa Liu (劉佩真) at the institute’s Taiwan Industry Economics Database said in a telephone interview. Trump’s move signals his intention to "restore the glory of the US semiconductor industry," Liu noted, saying that
STILL UNCLEAR: Several aspects of the policy still need to be clarified, such as whether the exemptions would expand to related products, PwC Taiwan warned The TAIEX surged yesterday, led by gains in Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), after US President Donald Trump announced a sweeping 100 percent tariff on imported semiconductors — while exempting companies operating or building plants in the US, which includes TSMC. The benchmark index jumped 556.41 points, or 2.37 percent, to close at 24,003.77, breaching the 24,000-point level and hitting its highest close this year, Taiwan Stock Exchange (TWSE) data showed. TSMC rose NT$55, or 4.89 percent, to close at a record NT$1,180, as the company is already investing heavily in a multibillion-dollar plant in Arizona that led investors to assume
AI: Softbank’s stake increases in Nvidia and TSMC reflect Masayoshi Son’s effort to gain a foothold in key nodes of the AI value chain, from chip design to data infrastructure Softbank Group Corp is building up stakes in Nvidia Corp and Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the latest reflection of founder Masayoshi Son’s focus on the tools and hardware underpinning artificial intelligence (AI). The Japanese technology investor raised its stake in Nvidia to about US$3 billion by the end of March, up from US$1 billion in the prior quarter, regulatory filings showed. It bought about US$330 million worth of TSMC shares and US$170 million in Oracle Corp, they showed. Softbank’s signature Vision Fund has also monetized almost US$2 billion of public and private assets in the first half of this year,
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