European stocks retreated this week as protests in Egypt and an unexpected drop in the UK’s GDP offset accelerating US economic growth in the fourth quarter.
UK clothing retailer Next PLC slumped 7 percent as the UK economy shrank. AXA SA rallied 2.9 percent after HSBC Holdings PLC said insurers face “limited risks” from indebted eurozone countries. Software AG led technology stocks higher, rising 12 percent this past week after reporting better-than-estimated profits.
The benchmark STOXX Europe 600 Index fell 0.3 percent to 280.45 for the measure’s second straight weekly decline. Even so, the gauge has rallied 21 percent since its low in May last year amid optimism that the US economy is strengthening and as European governments implemented policies to support indebted countries using the single currency.
“Some of the European data was weak and the UK’s gross domestic product was lower than expected, although the message on the US economy is still okay to good, which should support equity markets going forward,” said Simon Maughan, co-head of European equities at MF Global UK Ltd.
Stocks fluctuated earlier in the week amid worse-than-forecast economic data in Europe. The Office for National Statistics in London said the UK’s GDP shrank 0.5 percent in the three months through last month after increasing 0.7 percent in the previous quarter. Economists surveyed by Bloomberg had forecast a 0.5 percent gain.
The country’s economic growth would have been “flattish” in the quarter without the unexpectedly cold weather last month, the statistics office said.
Meanwhile, a gauge of European bank shares dropped 1.3 percent as a plan by Spain’s government to strengthen its indebted savings banks failed to convince investors.
Spanish Minister of Economy and Finance Elena Salgado said the country’s lenders require no more than 20 billion euros (US$27.2 billion) of extra capital, “all or part” of which they will be able to raise in financial markets. Lenders will have until the autumn to raise enough capital to meet the rules.
CHIP WAR: Tariffs on Taiwanese chips would prompt companies to move their factories, but not necessarily to the US, unleashing a ‘global cross-sector tariff war’ US President Donald Trump would “shoot himself in the foot” if he follows through on his recent pledge to impose higher tariffs on Taiwanese and other foreign semiconductors entering the US, analysts said. Trump’s plans to raise tariffs on chips manufactured in Taiwan to as high as 100 percent would backfire, macroeconomist Henry Wu (吳嘉隆) said. He would “shoot himself in the foot,” Wu said on Saturday, as such economic measures would lead Taiwanese chip suppliers to pass on additional costs to their US clients and consumers, and ultimately cause another wave of inflation. Trump has claimed that Taiwan took up to
A start-up in Mexico is trying to help get a handle on one coastal city’s plastic waste problem by converting it into gasoline, diesel and other fuels. With less than 10 percent of the world’s plastics being recycled, Petgas’ idea is that rather than letting discarded plastic become waste, it can become productive again as fuel. Petgas developed a machine in the port city of Boca del Rio that uses pyrolysis, a thermodynamic process that heats plastics in the absence of oxygen, breaking it down to produce gasoline, diesel, kerosene, paraffin and coke. Petgas chief technology officer Carlos Parraguirre Diaz said that in
SUPPORT: The government said it would help firms deal with supply disruptions, after Trump signed orders imposing tariffs of 25 percent on imports from Canada and Mexico The government pledged to help companies with operations in Mexico, such as iPhone assembler Hon Hai Precision Industry Co (鴻海精密), also known as Foxconn Technology Group (富士康科技集團), shift production lines and investment if needed to deal with higher US tariffs. The Ministry of Economic Affairs yesterday announced measures to help local firms cope with the US tariff increases on Canada, Mexico, China and other potential areas. The ministry said that it would establish an investment and trade service center in the US to help Taiwanese firms assess the investment environment in different US states, plan supply chain relocation strategies and
WASHINGTON POLICY: Tariffs of 10 percent or more and other new costs are tipped to hit shipments of small parcels, cutting export growth by 1.3 percentage points The decision by US President Donald Trump to ban Chinese companies from using a US tariff loophole would hit tens of billions of dollars of trade and reduce China’s economic growth this year, according to new estimates by economists at Nomura Holdings Inc. According to Nomura’s estimates, last year companies such as Shein (希音) and PDD Holdings Inc’s (拼多多控股) Temu shipped US$46 billion of small parcels to the US to take advantage of the rule that allows items with a declared value under US$800 to enter the US tariff-free. Tariffs of 10 percent or more and other new costs would slash such