European stocks were unchanged this week, halting a two-week decline, as better-than-estimated results from ABB Ltd to PSA Peugeot Citroen offset a deeper- than-forecast contraction in the economy.
The STOXX Europe 600 Index was unchanged this week at 287.34. It fell 0.8 percent the previous two weeks as political uncertainty in Italy and Spain sent the nations’ bond yields higher. The gauge has still climbed 2.7 percent this year after US lawmakers agreed on a compromise budget.
“The growth outlook is improving, the liquidity backdrop is still supportive, earnings are robust and equity valuations are reasonable,” said Abi Oladimeji, who helps oversee US$4.3 billion as head of investment strategy at Thomas Miller Investment Ltd in London. “However, there are some short-term concerns that we are looking at. Markets appear to be overbought and the technicals are looking quite stretched.”
The STOXX 600 is trading at 12.3 times its companies’ estimated earnings, compared with an average of 11.5 over the past five years, according to data compiled by Bloomberg. The VSTOXX Index, which measures the expected volatility in the region through Euro STOXX 50 Index options prices, rose 1.6 percent this week.
A report this week showed the eurozone economy shrank more than forecast in the fourth quarter. GDP fell 0.6 percent from the previous three months, compared with the median estimate in a Bloomberg survey of economists for a contraction of 0.4 percent.
Ministers from the 17-member eurozone met during the week to discuss aid to Cyprus and Greece as a tightening election contest in Italy and a political scandal in Spain threatened to reignite the region’s debt crisis. G20 finance ministers and central bankers began gathering in Moscow on Friday to find some common ground on currencies.
National benchmark indexes climbed in 10 of the 18 western European markets. The UK’s FTSE 100 climbed 1 percent and France’s CAC 40 added 0.3 percent. Germany’s DAX fell 0.8 percent, while Denmark’s OMX Copenhagen 20 slumped 4.5 percent as Novo Nordisk A/S, which makes up 43 percent of the gauge, sank 11 percent after US regulators rejected its new insulin.
About 54 percent of companies in the Stoxx 600 reported earnings that topped analysts’ estimates this week, according to data compiled by Bloomberg.
ABB surged 8.8 percent, the biggest increase since December 2011. The Zurich-based company reported better-than-estimated earnings, helped by rising orders in the US, the Middle East and Africa.
IN THE AIR: While most companies said they were committed to North American operations, some added that production and costs would depend on the outcome of a US trade probe Leading local contract electronics makers Wistron Corp (緯創), Quanta Computer Inc (廣達), Inventec Corp (英業達) and Compal Electronics Inc (仁寶) are to maintain their North American expansion plans, despite Washington’s 20 percent tariff on Taiwanese goods. Wistron said it has long maintained a presence in the US, while distributing production across Taiwan, North America, Southeast Asia and Europe. The company is in talks with customers to align capacity with their site preferences, a company official told the Taipei Times by telephone on Friday. The company is still in talks with clients over who would bear the tariff costs, with the outcome pending further
NEGOTIATIONS: Semiconductors play an outsized role in Taiwan’s industrial and economic development and are a major driver of the Taiwan-US trade imbalance With US President Donald Trump threatening to impose tariffs on semiconductors, Taiwan is expected to face a significant challenge, as information and communications technology (ICT) products account for more than 70 percent of its exports to the US, Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) president Lien Hsien-ming (連賢明) said on Friday. Compared with other countries, semiconductors play a disproportionately large role in Taiwan’s industrial and economic development, Lien said. As the sixth-largest contributor to the US trade deficit, Taiwan recorded a US$73.9 billion trade surplus with the US last year — up from US$47.8 billion in 2023 — driven by strong
A proposed 100 percent tariff on chip imports announced by US President Donald Trump could shift more of Taiwan’s semiconductor production overseas, a Taiwan Institute of Economic Research (TIER) researcher said yesterday. Trump’s tariff policy will accelerate the global semiconductor industry’s pace to establish roots in the US, leading to higher supply chain costs and ultimately raising prices of consumer electronics and creating uncertainty for future market demand, Arisa Liu (劉佩真) at the institute’s Taiwan Industry Economics Database said in a telephone interview. Trump’s move signals his intention to "restore the glory of the US semiconductor industry," Liu noted, saying that
AI: Softbank’s stake increases in Nvidia and TSMC reflect Masayoshi Son’s effort to gain a foothold in key nodes of the AI value chain, from chip design to data infrastructure Softbank Group Corp is building up stakes in Nvidia Corp and Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the latest reflection of founder Masayoshi Son’s focus on the tools and hardware underpinning artificial intelligence (AI). The Japanese technology investor raised its stake in Nvidia to about US$3 billion by the end of March, up from US$1 billion in the prior quarter, regulatory filings showed. It bought about US$330 million worth of TSMC shares and US$170 million in Oracle Corp, they showed. Softbank’s signature Vision Fund has also monetized almost US$2 billion of public and private assets in the first half of this year,
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