European shares on Friday hit their highest level in nearly two months as investors flocked to technology stocks after positive US earnings overnight, while news of slowing revenue growth from Vodafone Group PLC weighed on telecoms.
The pan-European STOXX 600 rose 0.6 percent to post its fourth straight weekly gain, up 0.2 percent.
Frankfurt’s DAX was the top performer, while Britain’s exporter-heavy FTSE 100 underperformed as a stronger sterling weighed.
Exuberance for tech stocks continued even after Intel Corp delivered a profit and sales warning after the closing bell, blaming a slowdown in China and sluggish demand for its data center and modem chips.
The sector hit its highest level since Nov. 11 last year.
Investors instead drew comfort from better-than-expected earnings from other US chipmakers earlier in the session: Xilinx Inc, Lam Research Corp and Texas Instruments Inc.
The sector has been hit hard by fears about stagnating smartphone demand and a cooling Chinese economy after sales warnings from Apple, Samsung and Taiwan Semiconductor Manufacturing Co (台積電) earlier this month.
This week, though, investors have pounced every morsel of good news — chipmaker STMicro’s gloomy near-term guidance was ignored on Thursday in favor of its outlook for a strong second half.
“So much of the bad is priced in,” Accendo Markets analyst Mike van Dulken said.
The market was also bracing for key events next week.
The US Federal Reserve’s meeting on Wednesday would be closely watched for signs that the US central bank will delay its steady rate-hike cycle, while Washington and Beijing are to hold the next round of talks aimed at ending their festering trade spat.
The negotiations come as a March 1 deadline to resolve the dispute looms.
However, the chances of a truce are low, with both sides divided over major issues like China’s protection of its intellectual property.
“We’ve got a month until the deadline and it’s probably going to go down to the wire. The markets will be up and down until then on the soundbites from both sides,” Van Dulken said.
On Friday, a key German business morale indicator fell for the fifth straight month this month, while the European Central Bank’s (ECB) survey of professional forecasters pointed to sharply lower growth and inflation.
ECB President Mario Draghi on Thursday said that a dip in the 19-member eurozone’s economy could be deeper and longer than thought even a few weeks ago.
Automakers and parts suppliers, which are sensitive to trade frictions and the health of the Chinese economy, were the strongest performers, hitting Dec. 3 highs.
Mining and oil stocks also gained.
Telecoms were one of only two sectors in the red after disappointing results from Vodafone and Nordic telecom group Telia AB.
Vodafone was down 2.3 percent, hitting its lowest in nearly nine years after the world’s second-largest mobile operator said revenue growth slowed in the third quarter of last year due to ongoing price competition in Spain and Italy and a slowdown in South Africa.
The stock was knocked hard on Thursday after its South African unit issued disappointing results.
Telia was down 3.5 percent, at the bottom of the STOXX 600 after its weaker-than-expected results.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to