Europe’s stock markets fell sharply in morning trading yesterday but Asian shares mostly finished the day sharply higher after Democratic Senator Barack Obama was elected US president.
“There is an element of ‘buy the rumor, sell the news’ that is driving some profit-taking to kick in,” said Martin Slaney, head of derivatives at financial spread betting group GFT in London.
In late morning trading in Europe, the London market was down 2.68 percent, Paris shed 2.88 percent and Frankfurt lost 2.13. Madrid dropped 1.48 percent and Zurich dived 2.52 percent.
Meanwhile, Wall Street prepared to cash in some of the previous session’s big gains.
Tuesday’s election results were not surprising to the market, except perhaps in terms of the wide margin by which Obama beat Senator John McCain. Rather, investors appeared to be gauging the economy’s troubles again, and acknowledging the fact that stocks have recovered so sharply despite dismal data.
More grim readings are anticipated this week. The Institute for Supply Management is expected to report yesterday that the service sector shrank last month after expanding marginally in the previous month.
Later this week, the US Labor Department releases its highly anticipated report on job losses last month, which are predicted to be massive following a freeze-up in the credit markets that crimped many companies’ ability to get financing. Economists on average expect a 200,000 drop in payrolls, Thomson/IFR said.
Ahead of the market’s open, Dow Jones industrial futures fell 87, or 0.86 percent, to 9,500. Standard & Poor’s 500 index futures fell 11, or 1.10 percent, to 989.30, while NASDAQ 100 index futures fell 14.00, or 1.01 percent, to 1,366.50.
The Tokyo stock market ended yesterday with a gain of 4.46 percent, Hong Kong jumped 3.2 percent, Seoul gained 2.4 percent and Sydney won 2.9 percent.
Shanghai closed up 3.16 percent and Mumbai fell 4.81 percent.
In Taipei trading, share prices closed down 0.29 percent as investors pocketed recent gains, dealers said. The TAIEX fell 14.37 points at 4,978.26, off a low of 4,965.40 and a high of 5,095.98, on turnover of NT$83.73 billion (US$2.55 billion).
“The [Seoul] market rose sharply thanks to an overnight Wall Street rally and a continuing buying spree by foreign investors on hopes that the next American leader would act to boost the sluggish US economy,” Goodmorning Shinhan Securities Kim Jung-hyun told Yonhap news agency.
Investors across Europe were meanwhile gearing up for further cuts to interest rates today. The Bank of England was widely expected to cut its key lending rate by at least half a percentage point as recession looms in Britain amid a global financial crisis. Some economists are even forecasting the bank to follow up last month’s emergency half-point reduction to 4.50 percent with a cut of 1 percent this time around.
Since the bank’s Monetary Policy Committee won independence from the government in 1997, it has never reduced British borrowing costs by more than 50 basis points.
The European Central Bank (ECB) is also set to cut its main lending rate sharply at a meeting today as inflation is falling fast in the eurozone.
Economists’ consensus is for a cut of half a percentage point to 3.25 percent. Late last month, the US Federal Reserve slashed its key lending rate by a half point to match a historic low of 1 percent.
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
CROSS-STRAIT TENSIONS: The US company could switch orders from TSMC to alternative suppliers, but that would lower chip quality, CEO Jensen Huang said Nvidia Corp CEO Jensen Huang (黃仁勳), whose products have become the hottest commodity in the technology world, on Wednesday said that the scramble for a limited amount of supply has frustrated some customers and raised tensions. “The demand on it is so great, and everyone wants to be first and everyone wants to be most,” he told the audience at a Goldman Sachs Group Inc technology conference in San Francisco. “We probably have more emotional customers today. Deservedly so. It’s tense. We’re trying to do the best we can.” Huang’s company is experiencing strong demand for its latest generation of chips, called
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure
RSS