The growing diplomatic crisis over the Ukraine rattled US markets this week, producing the steepest declines in a week since January.
All three indices fell, with the biggest loss at the Dow Jones Industrial Average, which sank 387.05 (2.35 percent) to 16,065.67, while the broad-based S&P 500 lost 36.91 (1.96 percent) to close on 1,841.13 and the tech-rich NASDAQ Composite Index gave up 90.82 (2.09 percent) to end the week on 4,245.40.
Wall Street saw a flood of headlines about Ukraine that spelled a mushrooming crisis, including aggressive moves by the Russian military, a rise in violence at protests and inconclusive talks between US Secretary of State John Kerry and Russian Minister of Foreign Affairs Sergei Lavrov ahead of a referendum today on whether the Ukraine’s Crimea should join Russia.
“Investors fear the unknown,” BMO Private Bank chief investment officer Jack Ablin said. “Investors not only don’t know what’s going to happen, but investors don’t know what the implications of what could happen are.”
Washington and its European allies are preparing sanctions against Moscow over Ukraine, which could begin with visa bans on senior Russian officials.
“Sanctions against Moscow have already been more or less priced in the market,” Peter Cardillo of Rockwell Global Capital said. “But the greatest fear is an escalation of an economic war between Russia and the West. Sanctions are a first thing. Then, of course, who knows what can happen afterward?”
The week’s biggest piece of US economic data was a surprisingly solid report on US retail sales for last month, which rose 0.3 percent, bucking a trend of largely weak data attributed in part to frigid weather that depressed economic activity.
Markets reacted to a series of poor datapoints out of China, including a reading that Chinese industrial output rose 8.6 percent in the period from January to last month, the lowest in five years.
“Each time US investors worry about China, it results in lower stock prices,” BTIG chief global strategist Dan Greenhaus said.
The biggest corporate story of the week involved General Motors Co (GM), which faces a plethora of questions over its recall of 1.62 million vehicles in North America.
GM disclosed that it knew of the problem with the ignition switches tied to the recall as early as 2001, three years earlier than was previously thought.
Advocacy group the US Center for Auto Safety has released a study that linked 303 deaths to the airbags failing to properly deploy in recently recalled vehicles.
GM stock slid 9.6 percent this week as congressional committees opened probes into the recall. The US Department of Justice is also reportedly investigating the issue.
Also facing investigation is nutritional products marketer Herbalife International, which took a hit on Wall Street after disclosing that the US Federal Trade Commission has undertaken a probe of the company. The investigation follows months of charges by activist investor William Ackman that Herbalife is a pyramid scheme.
Herbalife shares sank 10.3 percent for the week.
In merger news, Chiquita Brands International Inc and Ireland’s Fyffes PLC announced that they would unite to form the world’s biggest banana company, a venture that will have a combined value of US$1.07 billion. Also, Men’s Wearhouse Inc and Jos. A. Bank Clothiers inc finally agreed to tie the knot after a lengthy and often contentious courtship.
Next week’s calendar includes a handful of corporate earnings reports, including Oracle Corp, FedEx Corp and Dow member Nike Inc.
It will also be a heavier week of economic releases, with major reports on housing starts and industrial production, as well as a two-day meeting of US Federal Reserve policymakers.
While these items will get attention, investors will be most focused on Ukraine, Ablin said, adding: “Investors generally have very short attention spans and they’re going to focus on the shiny object [in front of them].”
“This week, the shiny object is geopolitical developments and I think that’s where they’ll be focused next week,” he added.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
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
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the
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],”