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.
WEAKER ACTIVITY: The sharpest deterioration was seen in the electronics and optical components sector, with the production index falling 13.2 points to 44.5 Taiwan’s manufacturing sector last month contracted for a second consecutive month, with the purchasing managers’ index (PMI) slipping to 48, reflecting ongoing caution over trade uncertainties, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. The decline reflects growing caution among companies amid uncertainty surrounding US tariffs, semiconductor duties and automotive import levies, and it is also likely linked to fading front-loading activity, CIER president Lien Hsien-ming (連賢明) said. “Some clients have started shifting orders to Southeast Asian countries where tariff regimes are already clear,” Lien told a news conference. Firms across the supply chain are also lowering stock levels to mitigate
Six Taiwanese companies, including contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), made the 2025 Fortune Global 500 list of the world’s largest firms by revenue. In a report published by New York-based Fortune magazine on Tuesday, Hon Hai Precision Industry Co (鴻海精密), also known as Foxconn Technology Group (富士康科技集團), ranked highest among Taiwanese firms, placing 28th with revenue of US$213.69 billion. Up 60 spots from last year, TSMC rose to No. 126 with US$90.16 billion in revenue, followed by Quanta Computer Inc (廣達) at 348th, Pegatron Corp (和碩) at 461st, CPC Corp, Taiwan (台灣中油) at 494th and Wistron Corp (緯創) at
NEW PRODUCTS: MediaTek plans to roll out new products this quarter, including a flagship mobile phone chip and a GB10 chip that it is codeveloping with Nvidia Corp MediaTek Inc (聯發科) yesterday projected that revenue this quarter would dip by 7 to 13 percent to between NT$130.1 billion and NT$140 billion (US$4.38 billion and US$4.71 billion), compared with NT$150.37 billion last quarter, which it attributed to subdued front-loading demand and unfavorable foreign exchange rates. The Hsinchu-based chip designer said that the forecast factored in the negative effects of an estimated 6 percent appreciation of the New Taiwan dollar against the greenback. “As some demand has been pulled into the first half of the year and resulted in a different quarterly pattern, we expect the third quarter revenue to decline sequentially,”
ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip assembly and testing service provider, yesterday said it would boost equipment capital expenditure by up to 16 percent for this year to cope with strong customer demand for artificial intelligence (AI) applications. Aside from AI, a growing demand for semiconductors used in the automotive and industrial sectors is to drive ASE’s capacity next year, the Kaohsiung-based company said. “We do see the disparity between AI and other general sectors, and that pretty much aligns the scenario in the first half of this year,” ASE chief operating officer Tien Wu (吳田玉) told an
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