European stocks have fallen so much that they reached a technical level signaling a rebound might be around the corner.
The STOXX Europe 600 Index slid 0.8 percent, marking an 11th consecutive day without gains for the first time since 1994.
This week was particularly brutal, with concerns about the outcome of the US presidential election sending the gauge to its worst plunge since the February rout.
However, the losses might just have gone too far: The STOXX 600’s relative strength index (RSI) hit a level that analysts call oversold, indicating that investors could have bailed on shares too eagerly.
At the same time, European equity funds finally snapped a record 38-week run of outflows, according to a Bank of America Corp report citing EPFR Global data.
“There is a risk-off sentiment in the equity market since we’ve seen the polls tightening between [Democratic US presidential candidate Hillary Rodham] Clinton and [Republican US presidential candidate Donald] Trump,” Saxo Bank A/S trader Pierre Martin said by telephone from London. “The fact that we’ve broken into oversold territory shows that investors in Europe are expecting a bit more clarity, a bit more confidence from the US. In the short-term, a Clinton win may bring some relief.”
The 3.5 percent slump this week has sent the STOXX 600 to a four-month low.
Its valuation of 14 times estimated earnings is near the lowest relative to global equities since August.
On Friday, all its industry groups declined. No Western European market was spared, and the UK’s FTSE 100 Index posted the biggest drop among major gauges amid a strengthening of the pound. Its 4.3 percent weekly slump was its worst since January.
Anxiety over polls showing Clinton’s lead over Trump has narrowed added to concerns over the strength of Europe’s economic recovery and the willingness of central banks to keep policy accommodative. A measure of euro-area stock volatility rose for a 10th straight day, its longest run since 2011.
However, with the equity slump, the STOXX 600’s RSI has fallen to about 29, below the oversold level of 30. The last time it dropped lower than that limit was before the Brexit vote in June, and it subsequently rebounded 9.4 percent through a four-month high in September.
In an environment where investor sentiment is dominated by political events, a Clinton victory next week would bring a relief rally, at least in the short term, EFG Asset Management’s head of research Daniel Murray said.
“The economic data and the earnings season have been reasonable, but there are a lot of political crosswinds dampening sentiment,” Murray said from London. “Clinton may not be universally liked, but she does at least have senior administration experience, and would be viewed as a safer and more predictable helmsman.”
BUSINESS UPDATE: The iPhone assembler said operations outlook is expected to show quarter-on-quarter and year-on-year growth for the second quarter Hon Hai Precision Industry Co (鴻海精密) yesterday reported strong growth in sales last month, potentially raising expectations for iPhone sales while artificial intelligence (AI)-related business booms. The company, which assembles the majority of Apple Inc’s smartphones, reported a 19.03 percent rise in monthly sales to NT$510.9 billion (US$15.78 billion), from NT$429.22 billion in the same period last year. On a monthly basis, sales rose 14.16 percent, it said. The company in a statement said that last month’s revenue was a record-breaking April performance. Hon Hai, known also as Foxconn Technology Group (富士康科技集團), assembles most iPhones, but the company is diversifying its business to
Apple Inc has been developing a homegrown chip to run artificial intelligence (AI) tools in data centers, although it is unclear if the semiconductor would ever be deployed, the Wall Street Journal reported on Monday. The effort would build on Apple’s previous efforts to make in-house chips, which run in its iPhones, Macs and other devices, according to the Journal, which cited unidentified people familiar with the matter. The server project is code-named ACDC (Apple Chips in Data Center) within the company, aiming to utilize Apple’s expertise in chip design for the company’s server infrastructure, the newspaper said. While this initiative has been
Clambering hand-over-hand, sweat dripping into his eyes, a durian laborer expertly slices a cumbersome fruit from a tree before tossing it down to land with a soft thump in his colleague’s waiting arms about 15m below. Among Thailand’s most famous and lucrative exports, the pungent “king of fruits” is as distinctive in its smell as its spiky green-brown carapace, and has been farmed in the kingdom for hundreds of years. However, a vicious heat wave engulfing Southeast Asia has resulted in smaller yields and spiraling costs, with growers and sellers increasingly panicked as global warming damages the industry. “This year is a crisis,”
HIGH-TECH: As leading-edge process technologies become more complicated, only a handful of players are able to provide design services, the company’s CEO said Artificial intelligence (AI) chip designer Alchip Technologies Ltd (世芯) yesterday said that revenue would grow significantly again in 2026 after adding a major AI chip customer, reversing moderation amid a product transition next year. The Taipei-based application-specific IC (ASIC) designer reiterated its strong revenue growth forecast for this year and 2026 after its stock plummeted about 23 percent to NT$3,145 from a peak of NT$4,085 on March 6 amid growing competition. Alchip said it has built strong partnerships with cloud service providers (CSP), denying that it had lost orders to smaller competitors such as Faraday Technology Corp (智原). Faraday said it has secured