European stocks dropped for a fourth straight week, the longest stretch of losses since March, as oil retreated and concern mounted that earnings reports will show the economic slump is far from over.
Royal Dutch Shell PLC, BP PLC and Total SA slid more than 3 percent as crude headed for the biggest weekly drop since January. Aviva PLC led insurers lower on speculation it will cut its dividend.
Renault SA, France’s second-largest automaker, sank 11 percent as chief executive officer Carlos Ghosn said the expiration of state-backed sales incentives will offset any improvement in demand next year.
The Dow Jones STOXX 600 Index declined 3.4 percent in the past week to 197.25, the lowest since April. The measure has slumped 8.2 percent since June 11 on speculation share prices have outpaced the outlook for economic growth after a three-month rally pushed valuations to 25.4 times earnings, the highest level since 2004.
“We are still in a consolidation phase after the gains we saw in March and April,” said Daniel Knuchel, who oversees about US$3 billion as chief investment officer at AAM Privatbank AG in Zurich. “The risk appetite has clearly retreated since then and sentiment is less positive. Markets are very news driven and investors are waiting for the earnings season.”
The IMF forecast the global economy will shrink 1.4 percent this year before expanding 2.5 percent next year. In April, the Washington-based lender had predicted a 1.3 percent contraction this year, followed by 1.9 percent growth next year.
National benchmark indexes fell in all 18 western European markets. The UK’s FTSE 100 slipped 2.6 percent and France’s CAC 40 retreated 4.4 percent. Germany’s DAX dropped 2.8 percent as Porsche SE declined.
Shell, Europe’s biggest oil company, decreased 3.8 percent in London. BP and Total, the second and third-largest, slid 3.7 percent and 4.6 percent respectively.
Aviva, the UK’s largest insurer, tumbled 19 percent, dragging a gauge of insurers 6.7 percent lower for the biggest decline among 19 industry groups in the STOXX 600.
“We estimate that Aviva cannot rule out reducing its dividend distribution by 20 percent at least this year,” CA Cheuvreux analyst Jean D’Herbecourt in Paris wrote in a report on Tuesday, reducing his recommendation on the stock to “underperform” from “outperform.”
Bloomberg’s analysis and research showed on Friday that the insurer may reduce its interim dividend next month to £0.0875 a share from £0.1309 last year.
Infineon Technologies AG surged 12 percent. Europe’s second-largest chipmaker agreed to sell its Wireline Communications business to an affiliate of Golden Gate Capital Corp for 250 million euros (US$346 million).
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