Stocks in Europe climbed to a two-month high this week, as European Central Bank (ECB) president Mario Draghi reiterated his commitment to raising inflation as fast as possible and China cut interest rates.
The STOXX Europe 600 Index added 2.1 percent to 345.24 at the close of trading on Friday, snapping a two-day losing streak. The equity benchmark has advanced 2.9 percent this week amid investor speculation of further ECB stimulus. Stocks extended gains on Friday after China slashed interest rates, with miners leading.
“There are two key drivers, with the first being Draghi saying inflation needs to be boosted as soon as possible, which makes quantitative easing more likely,” Steen Jakobsen, chief investment officer at Saxo Bank A/S in Copenhagen, said by telephone. “The decision of the Chinese central bank to cut interest rates shows that China is also reacting to the slowdown. This makes the market perceive a perfect risk-on day for Friday.”
Speaking at the European Banking Congress, Draghi said the ECB must drive inflation higher quickly and will widen its asset-purchase program if necessary.
Any new action would follow measures including interest rate cuts, long-term bank loans and covered bond purchases, with the buying of asset-backed securities said to have started on Friday. Draghi has also declined to rule out buying government bonds.
He said this month that ECB staff have been told to study ways to boost an economy that grew just 0.2 percent last quarter and where inflation of 0.4 percent is persistently below the bank’s goal.
China cut benchmark interest rates for the first time since July 2012 as leaders seek to support growth in the world’s second-largest economy. The reduction follows liquidity injections and targeted cuts to reserve requirements.
National benchmark indices climbed in 17 of the 18 Western European markets on Friday. Spain’s IBEX rose 3.1 percent to post its biggest advance since July last year, while Italy’s FTSE MIB added 3.9 percent for its largest gain in more than two years. Portugal’s PSI 20 Index rose 2.5 percent and Germany’s DAX increased 2.6 percent.
A gauge of commodity producers posted the biggest gain of the 19 industry groups on the STOXX 600 after China cut interest rates.
WASHINGTON’S INCENTIVES: The CHIPS Act set aside US$39 billion in direct grants to persuade the world’s top semiconductor companies to make chips on US soil The US plans to award more than US$6 billion to Samsung Electronics Co, helping the chipmaker expand beyond a project in Texas it has already announced, people familiar with the matter said. The money from the 2022 CHIPS and Science Act would be one of several major awards that the US Department of Commerce is expected to announce in the coming weeks, including a grant of more than US$5 billion to Samsung’s rival, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), people familiar with the plans said. The people spoke on condition of anonymity in advance of the official announcements. The federal funding for
HIGH DEMAND: The firm has strong capabilities of providing key components including liquid cooling technology needed for AI servers, chairman Young Liu said Hon Hai Precision Industry Co (鴻海精密) yesterday revised its revenue outlook for this year to “significant” growth from a “neutral” view forecast five months ago, due to strong demand for artificial intelligence (AI) servers from cloud service providers. Hon Hai, a major assembler of iPhones that is also known as Foxconn, expects AI server revenues to soar more than 40 percent annually this year, chairman Young Liu (劉揚偉) told investors. The robust growth would uplift revenue contribution from AI servers to 40 percent of the company’s overall server revenue this year, from 30 percent last year, Liu said. In the three-year period
LONG HAUL: Largan Energy Materials’ TNO-based lithium-ion batteries are expected to charge in five minutes and last about 20 years, far surpassing conventional technology Largan Precision Co (大立光) has formed a joint venture with the Industrial Technology Research Institute (ITRI, 工研院) to produce fast-charging, long-life lithium-ion batteries for electric vehicles, mobile electronics and electric storage units, the camera lens supplier for Apple Inc’s iPhones said yesterday. Largan Energy Materials Co (萬溢能源材料), established in January, is developing high-energy, fast-charging, long-life lithium-ion batteries using titanium niobium oxide (TNO) anodes, it said. TNO-based batteries can be fully charged in five minutes and have a lifespan of 20 years, a major advantage over the two to four hours of charging time needed for conventional graphite-anode-based batteries, Largan said in a
Taiwan is one of the first countries to benefit from the artificial intelligence (AI) boom, but because that is largely down to a single company it also represents a risk, former Google Taiwan managing director Chien Lee-feng (簡立峰) said at an AI forum in Taipei yesterday. Speaking at the forum on how generative AI can generate possibilities for all walks of life, Chien said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) — currently among the world’s 10 most-valuable companies due to continued optimism about AI — ensures Taiwan is one of the economies to benefit most from AI. “This is because AI is