Signs that Europe’s recovery is struggling and investors rushing to sell company stakes put a halt to this week’s rally in European shares.
Polymetal International PLC sank 7.4 percent after two investors said they would sell 13 million shares of the miner.
Moncler SpA, the Italian maker of luxury skiwear, dropped 2.2 percent and Scout24 AG, a German operator of online classifieds businesses, fell 4.1 percent after shareholders also sold a stake.
CaixaBank SA lost 3.8 percent, helping send lenders to the biggest decline among sectors, after it sold shares for 1.3 billion euros (US$1.5 billion) to fund its takeover of Portugal’s Banco BPI SA.
“It may well signal a more cautious stance,” said Ralf Zimmermann, a strategist at Bankhaus Lampe in Dusseldorf, Germany. “Drivers for a sustainable increase in stock prices would be a reasonable acceleration in the business and earnings cycle, but we don’t see that happening in the short term, so we’re stuck in a broader sideways-trading range.”
European equities trimmed their biggest weekly advances since July, with almost all industry groups falling, as skepticism about the recovery resurfaced. A monthly composite purchasing managers index slumped to a 20-month low, and economic data are back to missing forecasts.
The STOXX Europe 600 Index lost 0.7 percent on Friday and a Bank of America Corp report showed fund managers have withdrawn money from the region’s equities for a 33rd straight week, extending a record streak of outflows.
While the STOXX 600 rallied 3 percent in the past four days as the US Federal Reserve kept borrowing costs unchanged and the Bank of Japan said it would adjust its asset buying to control bond yields, European equities have been stuck in a tight trading range.
Since the end of May, the benchmark gauge’s 100-day moving average has been hovering around the same level.
The European index is down 5.6 percent this year, while peers in the US and Asia have climbed more than 6 percent. The region’s lenders have led the declines amid growing worries about profitability in a low-rate environment, while legal costs mount and Italy might face a banking crisis.
On Friday, European lenders fell from an almost two-week high, with Spanish firms leading the losses.
Banco Santander SA dropped 3.3 percent, its biggest slide since Aug. 2, while Banco de Sabadell SA lost 4.2 percent. Deutsche Bank AG, down 2 percent and trading near a record low, has been in focus after the US sought US$14 billion to settle claims related to the sale of mortgage-backed securities, and German politicians are increasingly concerned about the company’s finances.
Banks pushed Spain’s IBEX 35 Index 1.3 percent lower, while benchmark gauges of Italy and Portugal declined more than 0.7 percent. The OMX Copenhagen 20 CAP Index lost 1.5 percent, with drugmaker H. Lundbeck A/S sinking 15 percent, the most since 2009.
The company said a treatment for Alzheimer’s disease failed the first of three pivotal studies. Germany’s DAX slipped 0.4 percent after its biggest jump since Aug. 9, with Deutsche Bank falling the most. The UK’s FTSE 100 Index was little changed.
While Royal Bank of Scotland Group PLC and Lloyds Banking Group PLC fell more than 2 percent, homebuilders climbed after Liberum upgraded the sector’s price estimates.
Sports Direct International PLC rallied 5.5 percent after saying founder Mike Ashley would take over as chief executive officer, replacing Dave Forsey.
Among other stocks moving, Nestle SA declined 1.7 percent as analysts said a company presentation on Thursday suggested that organic sales growth might be lower than expected. Swiss food maker Aryzta AG jumped 9.9 percent after saying Gary McGann, chairman of Paddy Power Betfair PLC, would join its board as chairman. Moleskin SpA jumped a record 16 percent after Belgium’s D’Ieteren SA said it would make an offer to buy the Italian lifestyle company.
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure