European stock indices on Friday dived by as much as 2 percent as US President Donald Trump’s warning of new tariffs on China sank stock markets worldwide and sent trade-sensitive sectors like mining and automakers into a tailspin.
Abruptly ending a temporary trade truce between the two countries, Trump said that he would impose a 10 percent tariffs on US$300 billion of Chinese exports to the US from Sept. 1.
That on Friday sent the pan-European STOXX 600 down 9.53 points, or 2.5 percent, to 378.15, a six-week low and a plunge of 3.2 percent from a close of 390.73 on July 26, with the basic material sector plunging 3.9 percent, and the auto and tech sectors sliding 2.7 percent.
“The announcement will only serve to create additional downward pressure on business confidence,” UBS Global Wealth Management chief investment officer Mark Haefele wrote in a note. “If businesses stop hiring, this would greatly increase the risk of a recession.”
Chipmakers Siltronic AG, Infineon Technologies AG, STMicroelectronics NV and ASML Holding NV each dropped between 4 percent and 6 percent.
Paris’ CAC 40 on Friday dropped 198.41 points, or 3.6 percent, to 5,359.00, plummeting 4.5 percent from 5,610.05 a week earlier.
Germany’s DAX on Friday fell 380.71 points, or 3.1 percent, to 11,872.44, a plunge of 4.4 percent from a close of 12,419.9 on July 26.
Most of Europe’s main markets were set for their worst week since a slide in May, when a sudden breakdown in trade talks between the US and China hammered markets.
A rally since then had been fueled by hopes that major central banks would adopt looser monetary policy to offset the trade war’s effects on growth, but the European Central Bank and the US Federal Reserve last month disappointed investors with stances that were more cautious than expected.
Adding to the auto sector’s woes, Italian tire maker Pirelli & C SpA slipped 4.6 percent after cutting revenue guidance for the second time this year, joining a string of suppliers hit by a broader auto industry downturn.
“We now see a higher risk that tariffs could also be placed on auto imports,” Haefele wrote. “Back in May, Trump announced that a decision on auto tariffs would be delayed by six months to allow time for negotiations, and it appears that little progress has been made since then.”
Corporate earnings for the second quarter continued to pour in.
French lender Credit Agricole Group slipped 5.3 percent after it said that a weak performance at its corporate and investment unit had weighed on its profits.
German insurer Allianz SE fell 2.7 percent and was among the biggest drags on STOXX 600, despite posting a better-than-expected quarterly net profit and confirming its full-year profit target.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts