A slump in Spanish and Italian lenders sent European stocks down for a second week, the longest streak since October last year.
The STOXX Europe 600 Index lost 1.3 percent to 337.93 at the close of trading in London on Friday, amid concern that the European Central Bank’s (ECB) bond-buying plans would not be enough to shore up the economy, while a US employment report showed a drop in hourly earnings. Friday’s decline brought the measure down 1 percent for the week.
The ECB is studying models for buying as much as 500 billion euros (US$591 billion) of investment-grade assets, a person familiar with the matter said. While the STOXX 600 briefly erased gains after better-than-forecast US jobs data, it then fell as much as 1.8 percent as earnings for all employees unexpectedly declined from a month earlier.
“This has the potential to have a negative impact as it is only 500 billion euros,” said Soeren Steinert, an associate director for equities trading at Quoniam Asset Management GmbH in Frankfurt, referring to the potential ECB bond-buying models. “Other higher numbers were rumored — even trillions — and [ECB President Mario] Draghi talked about unlimited firepower. So these dramatic words built up expectations. I don’t think this is big enough.”
The STOXX 600 reversed a two-day gain. It rallied the most in three weeks on Thursday, erasing losses for this year, amid speculation that weak inflation data this week bolster the case for the ECB to start sovereign-bond purchases at its Jan. 22 meeting. The benchmark gauge has posted gains in January in three of the past four years, data compiled by Bloomberg show.
The volume of shares on the benchmark index traded was 23 percent higher than the 30-day average, data compiled by Bloomberg show.
Banks declined the most among 19 industry groups in the STOXX 600, falling 3.2 percent to their lowest level since September 2013.
Banco Santander SA plunged 14 percent, the most since 1999, after its board approved plans to cut its dividend and sell shares for as much as 7.5 billion euros. Shares of Spain’s largest bank rose 3.3 percent on Thursday before the regulator suspended them.
Banca Monte dei Paschi di Siena SpA tumbled 8.6 percent after the ECB told the Italian lender to increase its minimum capital ratio as part of its fundraising plan.
Spain’s IBEX 35 Index lost 3.9 percent, the most since September 2012 and the biggest drop among 18 Western European markets. Italy’s FTSE MIB Index slid 3.3 percent for the second-worst performance and France’s CAC 40 Index lost 1.9 percent. A terror crisis in Paris deepened after a massacre at satirical weekly Charlie Hebdo left 12 people dead earlier this week.
In the UK, homebuilders Taylor Wimpey PLC, Barratt Developments PLC and Persimmon PLC fell more than 5 percent as a report showed house-price growth in England and Wales slowed.
Among other stocks moving on corporate news on Friday, Tesco PLC lost 2.5 percent. The UK grocer, which surged the most in more than 26 years on Thursday after announcing measures from lower prices to store closures, was cut to below investment grade at Moody’s Investors Service.
Softbank Group Corp plans to keep a stake in the chip designer Arm Ltd, even if it sells a partial interest to Nvidia Corp, the Nikkei reported. The companies are negotiating terms, the newspaper reported, citing sources. Softbank might take a stake in Nvidia after it buys Arm, the report said. Nvidia and Arm might also merge through a share swap, and Softbank would become a major shareholder in the combined company, it said. The two parties aim to reach a deal in the next few weeks, the sources said, asking not to be identified because the information is private. Nvidia is the
END TO SPECULATION: The hotel’s management contract has been extended, despite reports that it wanted to end its alliance with Hyatt Hotels over a deal with Riant Capital Singapore-based Hong Leong Hotel Development Ltd (豐隆大飯店股份) yesterday said it has extended a management contract to ensure the continued presence of the Grand Hyatt brand in Taipei, ending rumors that the two sides were parting ways. “We are pleased Hyatt is able to come to terms on the extension of the management contract of Grand Hyatt Taipei,” said Kwek Leng Beng (郭令明), executive chairman of City Developments Ltd (城市發展) and Millennium & Copthorne Hotels Ltd (千禧國敦酒店). Hong Leong Hotel Development is a subsidiary of Millennium, and both fall under the Hong Leong Group (豐隆集團). The Grand Hyatt Taipei (台北君悅大飯店), owned and built by
Gold surged to a fresh record on Friday, fueled by US dollar weakness and low interest rates, while silver headed for its best month since 1979. Spot bullion is up more than 10 percent this month, as US real yields lingered near record lows. While the ferocity of rallies in gold and silver cooled in the middle of the week, most market watchers predict there might be more gains ahead. Both metals have added about 30 percent this year, with gold and silver exchange-traded funds boosting holdings to a record, as concern about the fallout from the COVID-19 pandemic fuels demand for
MOVING FROM CHINA? The article did not name the company, but Foxconn, Wistron and Pegatron were among firms chosen for a production-linked incentive plan in India An Apple Inc vendor is looking at shifting six production lines to India from China, which could result in US$5 billion of iPhone exports from the South Asian nation, the Times of India reported, citing people familiar with the matter who it did not identify. The establishment of the facility would create about 55,000 jobs over about a year, the newspaper reported, not naming the Apple vendor. It would also cater to the domestic market and expand operations to include tablets and laptops, the newspaper reported. Samsung Electronics Co and Apple’s assembly partners are among 22 companies that have pledged 110 billion