The fear that has gripped Europe’s sovereign debt market for months took root in its stock markets as investors increasingly worried yesterday about uncertain growth prospects for some of the continent’s biggest companies.
Spain and Italy watched their borrowing costs drop further in signs of success for a massive central bank move to quell Europe debt’s crisis, but stock markets were in turmoil as stronger economies showed worrying signs of slowing.
Germany’s stock market was down for the 10th consecutive day and new data from Europe’s growth engine showed that export growth — a very closely watched economic indicator — was slowing down.
Photo: EPA
The Federal Statistical Office said exports in June were up by 3.1 percent to 88.3 billion euros (US$126 billion) on the year, the smallest increase in 16 months.
Germany has sailed through the debt crisis relatively unscathed. Despite much grumbling over the big contributions to the rescue packages for Greece, Ireland and Portugal, the eurozone’s largest economy enjoyed stellar growth last year.
However, if the current stock market sell-off continues, this may soon change. Since July 22, the day after eurozone leaders decided to give their bailout fund new powers, but refused to expand its size, Germany’s main stock index, the DAX, has lost more than 20 percent. That’s more than the 15 percent drop seen on the FTSE-100 in Britain or the 17 percent dive on the French CAC-40.
Closely watched German indicators of consumer confidence and business confidence also declined more than expected last month.
German output grew by 3.6 percent last year and the government in Europe’s biggest economy hopes growth this year will again top 3 percent, but in France — Germany’s biggest trading partner — growth is likely to only be 0.2 percent in the third quarter, the central bank said this week.
The Bank of France’s monthly industrial survey showed both corporate order books and factory utilization rates falling for the second month in a row last month.
The benchmark in France recovered from earlier losses and was slightly up in early afternoon trading, but the DAX was 1.4 percent lower, echoing Monday’s plunge on Wall Street, where the Dow Jones fell a dizzying 634 points.
“Investors are worried about rising global recession risks, the threat of a major bank bust, and a loss of confidence in G20 policymakers ability to resolve current economic and financial problems, especially in the eurozone,” analyst Neil MacKinnon of VTB Global Securities said.
The negative sentiment on stock markets contrasted with somewhat declining tensions on the Spanish and Italian bond markets, where intervention by the European Central Bank was starting to have an effect.
The yield, or interest rate, on Spanish 10-year bonds was at 5.03 percent, after approaching 6.5 percent just a week ago. The yield on the Italian equivalents was at 5.14 percent, also about 1 percentage point below where it was on Monday morning.
“It is the worst crisis since World War II and it could have been the worst crisis since World War I if leaders hadn’t taken the important decisions,” European Central Bank President Jean-Claude Trichet said on French radio station Europe 1, defending the bank’s decision to further intervene in the bond markets.
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
LANDSLIDES POSSIBLE: The agency advised the public to avoid visiting mountainous regions due to more expected aftershocks and rainfall from a series of weather fronts A series of earthquakes over the past few days were likely aftershocks of the April 3 earthquake in Hualien County, with further aftershocks to be expected for up to a year, the Central Weather Administration (CWA) said yesterday. Based on the nation’s experience after the quake on Sept. 21, 1999, more aftershocks are possible over the next six months to a year, the agency said. A total of 103 earthquakes of magnitude 4 on the local magnitude scale or higher hit Hualien County from 5:08pm on Monday to 10:27am yesterday, with 27 of them exceeding magnitude 5. They included two, of magnitude
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique