European stocks snapped two straight weeks of gains on speculation a rally that drove valuations on the Dow Jones STOXX 600 Index to the highest in six years has outpaced the prospects for economic and earnings growth.
A.P. Moeller-Maersk AS slumped 9.8 percent after the owner of the world’s largest container shipper held its biggest share sale since World War II to help finance acquisitions in the oil and terminals businesses. Eiffage SA led a slump among construction firms as reports on US unemployment and factory orders spurred concern that the economy is struggling to recover.
Europe’s STOXX 600 index slid 1.5 percent to 233.85 in the past week. The regional benchmark gauge has still soared 48 percent since March 9 as the French and German economies unexpectedly emerged from recession and profits at companies from Roche Holding AG to L’Oreal SA topped analysts’ estimates. The rally pushed the price-to-earnings ratio on the index to 44.8, near the highest level since September 2003, according to data compiled by Bloomberg.
Equity strategists at Goldman Sachs Group Inc and UBS AG raised their year-end forecasts for European equities, citing prospects for an economic recovery and a revival in earnings growth. Goldman Sachs lifted its estimate for the STOXX 600 index to 260 from 235, while UBS’s Nick Nelson increased his target for the FTSEurofirst 300 Index to 1,100 from 1,000.
“While we agree that the market tends to make its strongest returns while the economy is still contracting, albeit at a slowing rate, it tends to make further gains as the economy begins to expand,” a team of Goldman Sachs strategists led by Peter Oppenheimer in London wrote in a report dated Sept 3.
The US Federal Reserve expressed “considerable uncertainty” about the strength of the recovery in the world’s largest economy, minutes of its August meeting showed on Wednesday.
EU Monetary Affairs Commissioner Joaquin Almunia said he “cannot be optimistic” about unemployment in the region, which is at a 10-year high.
“The figures are worrying,” Almunia told reporters on Wednesday in Brussels after a meeting of European finance ministers. “I cannot be optimistic for the next months because we know from our experience that the negative reaction of the labor market to the economic contraction has a certain lag.”
The euro-area unemployment rate increased to 9.5 percent in July, the highest since June 1999, the EU statistics office in Luxembourg said on Monday. The European Commission forecasts the jobless rate will rise to 11.5 percent next year.
RETHINK? The defense ministry and Navy Command Headquarters could take over the indigenous submarine project and change its production timeline, a source said Admiral Huang Shu-kuang’s (黃曙光) resignation as head of the Indigenous Submarine Program and as a member of the National Security Council could affect the production of submarines, a source said yesterday. Huang in a statement last night said he had decided to resign due to national security concerns while expressing the hope that it would put a stop to political wrangling that only undermines the advancement of the nation’s defense capabilities. Taiwan People’s Party Legislator Vivian Huang (黃珊珊) yesterday said that the admiral, her older brother, felt it was time for him to step down and that he had completed what he
Taiwan has experienced its most significant improvement in the QS World University Rankings by Subject, data provided on Sunday by international higher education analyst Quacquarelli Symonds (QS) showed. Compared with last year’s edition of the rankings, which measure academic excellence and influence, Taiwanese universities made great improvements in the H Index metric, which evaluates research productivity and its impact, with a notable 30 percent increase overall, QS said. Taiwanese universities also made notable progress in the Citations per Paper metric, which measures the impact of research, achieving a 13 percent increase. Taiwanese universities gained 10 percent in Academic Reputation, but declined 18 percent
UNDER DISCUSSION: The combatant command would integrate fast attack boat and anti-ship missile groups to defend waters closest to the coastline, a source said The military could establish a new combatant command as early as 2026, which would be tasked with defending Taiwan’s territorial waters 24 nautical miles (44.4km) from the nation’s coastline, a source familiar with the matter said yesterday. The new command, which would fall under the Naval Command Headquarters, would be led by a vice admiral and integrate existing fast attack boat and anti-ship missile groups, along with the Naval Maritime Surveillance and Reconnaissance Command, said the source, who asked to remain anonymous. It could be launched by 2026, but details are being discussed and no final timetable has been announced, the source
CHINA REACTS: The patrol and reconnaissance plane ‘transited the Taiwan Strait in international airspace,’ the 7th Fleet said, while Taipei said it saw nothing unusual The US 7th Fleet yesterday said that a US Navy P-8A Poseidon flew through the Taiwan Strait, a day after US and Chinese defense heads held their first talks since November 2022 in an effort to reduce regional tensions. The patrol and reconnaissance plane “transited the Taiwan Strait in international airspace,” the 7th Fleet said in a news release. “By operating within the Taiwan Strait in accordance with international law, the United States upholds the navigational rights and freedoms of all nations.” In a separate statement, the Ministry of National Defense said that it monitored nearby waters and airspace as the aircraft