European stocks posted a second weekly loss, their first back-to-back decline in two months, as investor demand for equities waned before Christmas holidays and concern rose over a US Federal Reserve meeting next week on stimulus measures.
PSA Peugeot Citroen completed the biggest weekly slump since 2008 after disclosing a US$1.5 billion charge and as General Motors Co sold its entire stake in the French carmaker. RSA Insurance Group PLC slid 9.1 percent after CEO Simon Lee resigned amid an accounting probe that raised questions about internal controls at the insurer. John Wood Group PLC tumbled 9.6 percent after saying earnings next year at its engineering group may decrease by about 15 percent.
The STOXX Europe 600 Index fell 2.1 percent to 309.75 this week, with mean daily trading plunging 14 percent from this year’s average volume. The gauge has dropped 4.7 percent this month, trimming this year’s gains to 11 percent, as better-than- estimated US economic data led some investors to speculate the Fed will decide to slow bond purchases as early as next week. The Euro STOXX 50 Index of euro-area stocks lost 2 percent this week.
“These markets are running on fumes,” Michael Ingram, a market strategist at BGC Partners LP in London, said by phone. “There’s no real volume and no real conviction. Most money managers have basically shut up shop for the year. They’ve made decent money this year. People don’t want to mess up their performance by trying something in December.”
National benchmark indices retreated in all 18 Western European markets except for Iceland this week. Germany’s DAX fell 1.8 percent. France’s CAC 40 dropped 1.7 percent. The UK’s FTSE 100 lost 1.7 percent for its sixth consecutive weekly decline.
A majority of investors still believe the Fed will start to reduce US$85 billion a month of bond purchases only next year. Even so, 34 percent of economists surveyed by Bloomberg on Dec. 6 predicted the US central bank would decide to taper stimulus measures at its meetings on Tuesday and Wednesday. That proportion is higher than the 17 percent of respondents who said so in a Nov. 8 poll.
The US House of Representatives on Thursday passed the first bipartisan budget in four years and the Senate will review it next week. The plan will reduce the scope of automatic spending cuts by US$63 billion, sparing the federal government another shutdown like the one it experienced in October.
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure