A handful of negative company updates from Britain and France on Friday knocked European shares off record highs hit earlier in the session, while investors grappled with the effects of an outbreak of COVID-19 in China on global growth.
The pan-European STOXX 600 on Friday closed down 0.38 points, or 0.1 percent, to 430.70 — but still rose 1.5 percent from a close of 424.36 on Feb. 7 — after notching a new high of 432.26 in early afternoon trading.
London’s FTSE 100 on Friday underperformed its European peers with a drop of 42.90 points, or 0.6 percent, to 7,409.13, falling 0.8 percent from 7,466.70 a week earlier, as drugmaker AstraZeneca PLC forecast a possible slowdown in revenue growth this year, assuming a hit from China’s coronavirus epidemic.
France’s CAC 40 on Friday fell 23.78 points, or 0.4 percent, to 6,069.35, but gained 0.7 percent from a close of 6,029.75 a week earlier, as Barclays PLC downgraded several consumer stocks, saying that the outbreak would have major effects on Chinese consumption.
Cosmetics group L’Oreal SA and spirits makers Remy Cointreau SA and Pernod Ricard SA fell between 0.5 percent and 1.2 percent after the rating cut.
Renault SA dropped more than 4 percent on its first loss in 10 years as the automaker set a lower operating margin goal for this year, when it is to carry out its planned reboot alongside partner Nissan Motor Co Ltd after a scandal surrounding former boss Carlos Ghosn.
“The weekend provides plenty of scope for unpleasant surprises, hence the cautious attitude displayed by risk assets on most Fridays in the year so far,” IG Group PLC chief market analyst Chris Beauchamp wrote in a client note.
“But it has been yet another week where downside has failed to materialize in any real fashion, leaving investors with nothing to do but keep buying into the rally,” Beauchamp added.
Investors said that they thought the economic effects of the outbreak would not be as deep as feared, with some also finding succor in a spread beyond China that is not as rapid as feared.
Others have latched on to the possibility of further central bank stimulus measures in response to any slowdown. For example, the People’s Bank of China has already pumped liquidity into its economy.
“Our base case is that the virus can be largely controlled by end-March,” UBS Global Wealth Management chief investment officer Mark Haefele wrote to clients.
“The negative impact on the economy will be mostly confined to 1Q,” he wrote, predicting that growth would rebound from next month on the release of suppressed demand, as well as monetary and fiscal policy support.
Figures showed that eurozone economic growth slowed as expected in the fourth quarter, but employment growth picked up more than expected.
Other data showed that the German economy stagnated in the same period due to weaker private consumption and state spending, raising the risk of a recession in an economy hit by weak manufacturing activity.
Germany’s DAX on Friday ended flat, sliding 1.22 points to 13,744.21, but recorded a gain of 1.7 percent from 13,513.81 a week earlier.
Real estate and utilities were the best-performing European sectors for the day, rising about 1.5 percent each.
Utilities were boosted by France’s Electricite de France SA, which topped the STOXX 600 after its annual core earnings beat expectations.
Additional reporting by staff writer
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