European stocks fell this past week, led by financial companies and commodity producers on concern corporate earnings may deteriorate further as the global economic slowdown deepens.
BNP Paribas SA tumbled 31 percent after saying losses at its investment bank since October more than wiped out the division’s profit this year.
Royal Bank of Scotland Group Plc lost 23 percent after disclosing investments with Bernard Madoff, the investment adviser who was arrested in a potential US$50 billion fraud. BG Group Plc and Xstrata Plc both sank more than 3 percent as crude oil plunged below US$36 a barrel and metal prices fell.
The Dow Jones Stoxx 600 Index retreated 0.9 percent this week to 196.43, bringing its decline this year to 46 percent as credit losses and writedowns at the world’s largest banks surpassed US$1 trillion and the US, Europe and Japan entered the first simultaneous recessions since World War II.
“The economic slowdown is reflected in the price of oil,” said Chicuong Dang, an analyst at KBL Richelieu Gestion in Paris, which has about US$5.6 billion under management. “It shows that the market context is very difficult. We have to expect further downgrades of ratings and profit warnings. There’s a lot of volatility to come.”
The Stoxx 600 dropped every day this week except on Tuesday.
The US Federal Reserve this week cut its benchmark interest rate to as low as zero for the first time and pledged to use “all available tools” to spur economic growth.
US president-elect Barack Obama may ask Congress to approve a stimulus plan of around $850 billion.
The European Central Bank also cut the rate it pays institutions to deposit money with it overnight in an effort to jolt banks into lending more to each other.
National benchmark indexes rose in 10 out of 18 western European markets. Germany’s DAX gained 0.7 percent. Britain’s FTSE 100 rose 0.2 percent and France’s CAC 40 added 0.4 percent.
The Dow Jones Europe Stoxx Banks Index fell 6.5 percent in the week, the sharpest retreat among 19 industry groups.
BNP, France’s largest bank, plunged 31 percent. The corporate and investment division had a 710 million euro (US$981 million) pretax loss in the first 11 months of the year and may cut about 800 jobs, or 5 percent of the unit’s staff.
Separately, a Belgian court froze the lender’s plans to buy Fortis assets and the bank said it has as much as 350 million euros at risk from investments with Madoff.
Fortis, the insurer that was once Belgium’s largest financial services company, rallied 22 percent in Brussels.
HSBC Holdings Plc slipped 16 percent. CLSA Asia-Pacific Markets said Europe’s largest bank may seek to raise about US$14 billion as increasing bad-loan provisions erode profits. HSBC also has US$1 billion at risk after providing financing to funds that invested with Madoff.
NO-LIMITS PARTNERSHIP: ‘The bottom line’ is that if the US were to have a conflict with China or Russia it would likely open up a second front with the other, a US senator said Beijing and Moscow could cooperate in a conflict over Taiwan, the top US intelligence chief told the US Senate this week. “We see China and Russia, for the first time, exercising together in relation to Taiwan and recognizing that this is a place where China definitely wants Russia to be working with them, and we see no reason why they wouldn’t,” US Director of National Intelligence Avril Haines told a US Senate Committee on Armed Services hearing on Thursday. US Senator Mike Rounds asked Haines about such a potential scenario. He also asked US Defense Intelligence Agency Director Lieutenant General Jeffrey Kruse
INSPIRING: Taiwan has been a model in the Asia-Pacific region with its democratic transition, free and fair elections and open society, the vice president-elect said Taiwan can play a leadership role in the Asia-Pacific region, vice president-elect Hsiao Bi-khim (蕭美琴) told a forum in Taipei yesterday, highlighting the nation’s resilience in the face of geopolitical challenges. “Not only can Taiwan help, but Taiwan can lead ... not only can Taiwan play a leadership role, but Taiwan’s leadership is important to the world,” Hsiao told the annual forum hosted by the Center for Asia-Pacific Resilience and Innovation think tank. Hsiao thanked Taiwan’s international friends for their long-term support, citing the example of US President Joe Biden last month signing into law a bill to provide aid to Taiwan,
China’s intrusive and territorial claims in the Indo-Pacific region are “illegal, coercive, aggressive and deceptive,” new US Indo-Pacific Commander Admiral Samuel Paparo said on Friday, adding that he would continue working with allies and partners to keep the area free and open. Paparo made the remarks at a change-of-command ceremony at Joint Base Pearl Harbor-Hickam in Hawaii, where he took over the command from Admiral John Aquilino. “Our world faces a complex problem set in the troubling actions of the People’s Republic of China [PRC] and its rapid buildup of forces. We must be ready to answer the PRC’s increasingly intrusive and
STATE OF THE NATION: The legislature should invite the president to deliver an address every year, the TPP said, adding that Lai should also have to answer legislators’ questions The Chinese Nationalist Party (KMT) yesterday proposed inviting president-elect William Lai (賴清德) to make a historic first state of the nation address at the legislature following his inauguration on May 20. Lai is expected to face many domestic and international challenges, and should clarify his intended policies with the public’s representatives, KMT caucus secretary-general Hung Meng-kai (洪孟楷) said when making the proposal at a meeting of the legislature’s Procedure Committee. The committee voted to add the item to the agenda for Friday, along with another similar proposal put forward by the Taiwan People’s Party (TPP). The invitation is in line with Article 15-2