European stocks slid, posting the biggest retreat since they began rallying in January, as concern over Greek debt was exacerbated by declines in the US and Asia.
The STOXX Europe 600 Index lost 1.8 percent to 403.69 at the close of trading, completing the worst week of the year.
The Greek ASE Index slid 3 percent, with the National Bank of Greece SA and Alpha Bank AE tumbling more than 7 percent, as the country struggled to win more aid to avoid a default.
Germany’s DAX plunged 5.5 percent this week, the most since 2011.
European stocks fell for a second day after reaching a fresh peak on Wednesday, taking weekly losses to 2.2 percent. The STOXX 600 is still up 18 percent this year amid European Central Bank stimulus, and trades near the highest level relative to projected profits of its members in at least a decade.
“We’ve become a bit more cautious over the past few months because markets have been rallying pretty rapidly,” said Dirk Thiels, head of investment management at KBC Asset Management in Brussels. “Valuations are pricing in a lot. Stocks are still pretty close to a record.”
The volume of STOXX 600-listed shares traded was 22 percent higher than the 30-day average, data compiled by Bloomberg show. All 19 industry groups fell.
Greek stocks plunged 6 percent this week for the worst performance among Western European markets. IMF Managing Director Christine Lagarde warned on Thursday that she would not let the country miss a debt payment.
“The major macro thing at play now is the Greek saga,” Thiels said. “There’s a low chance of a Greek exit, but anything between that and a full-fledged rescue is also possible.”
European and US stocks fell with China’s index futures after regulators in the world’s second-biggest economy clamped down on the use of shadow financing for equity purchases and expanded the supply of shares available for short sellers.
Among stocks moving on corporate news, Syngenta AG dropped 4.4 percent after first-quarter sales missed projections. SKF AB tumbled 8.2 percent after reporting profit below estimates. Abertis Infraestructuras SA fell 2.7 percent as an investor sold a stake.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
Hong Kong authorities ramped up sales of the local dollar as the greenback’s slide threatened the foreign-exchange peg. The Hong Kong Monetary Authority (HKMA) sold a record HK$60.5 billion (US$7.8 billion) of the city’s currency, according to an alert sent on its Bloomberg page yesterday in Asia, after it tested the upper end of its trading band. That added to the HK$56.1 billion of sales versus the greenback since Friday. The rapid intervention signals efforts from the city’s authorities to limit the local currency’s moves within its HK$7.75 to HK$7.85 per US dollar trading band. Heavy sales of the local dollar by
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
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