European stocks fell for a fourth week, the longest streak of losses in more than a year, as concern grew that central banks may reduce stimulus measures.
The benchmark Stoxx Europe 600 Index slid 1.5 percent to 291.13 this week, the longest stretch of declines since April last year. The measure has retreated 6.3 percent since US Federal Reserve Chairman Ben Bernanke said on May 22 that the Fed may lower its stimulus measures if the US economy improves sustainably.
“What we’re seeing in the markets now is a correction,” said William de Vijlder, chief investment officer at BNP Paribas Investment Partners. “Before Bernanke spoke, markets were driven by enthusiasm about quantitative easing. The big change is the view on the ground that the most important central bank in the world might do something about its unconventional monetary policy.”
Stocks fell as investors also speculated that the market rally has overshot the earnings outlook.
Shares on the Stoxx 600 rose to 13.5 times estimated earnings on May 17 from nine times in September 2011. That is the highest valuation since the end of 2009.
Stocks on the index traded at 12.9 times projected earnings as of June 14, according to data compiled by Bloomberg.
National benchmark indices fell in 16 of the 18 western European markets this week. The UK’s FTSE 100 lost 1.6 percent. France’s CAC 40 decreased 1.7 percent and Germany’s DAX Index declined 1.5 percent.
Greece became the first developed country to be cut to emerging-market status by MSCI Inc.
The country failed to meet criteria regarding securities borrowing and lending facilities, short selling and transferability, according to an MSCI statement on Tuesday.
The Mediterranean nation’s benchmark ASE Index dropped 6.8 percent this week as politicians wrangled over the closure of the state-controlled broadcaster ERT, renewing concerns about the stability of the Greek government.
Severn Trent slid 15 percent, its biggest weekly drop since October 2008. A bidding group led by Canada’s Borealis Infrastructure Management Inc abandoned a ￡5.3 billion (US$8.3 billion) plan to take over the UK water utility as a deadline expired on Tuesday.
Legrand declined 5.9 percent, the largest weekly decline since June last year. Wendel, France’s biggest publicly-traded investment firm, sold the remaining 14.4 million shares it held in the world’s largest maker of switches, plugs and lighting controls on Tuesday.
Royal Bank of Scotland Group PLC slid 3.5 percent after saying on Wednesday that chief executive officer Stephen Hester is to resign this year.
Kabel Deutschland advanced 11 percent, the biggest weekly gain since at least April 2010, after Vodafone said on Wednesday that it made a “preliminary approach” to discuss acquiring the German cable operator to expand in the broadband and TV markets.
Vodafone is to bid for Kabel within days, Wirtschaftswoche magazine reported on Friday, citing unidentified bankers. The offer would have to exceed 10 billion euros (US$13.3 billion), including debt, according to the report.
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
WEAKER ACTIVITY: The sharpest deterioration was seen in the electronics and optical components sector, with the production index falling 13.2 points to 44.5 Taiwan’s manufacturing sector last month contracted for a second consecutive month, with the purchasing managers’ index (PMI) slipping to 48, reflecting ongoing caution over trade uncertainties, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. The decline reflects growing caution among companies amid uncertainty surrounding US tariffs, semiconductor duties and automotive import levies, and it is also likely linked to fading front-loading activity, CIER president Lien Hsien-ming (連賢明) said. “Some clients have started shifting orders to Southeast Asian countries where tariff regimes are already clear,” Lien told a news conference. Firms across the supply chain are also lowering stock levels to mitigate
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
RESHAPING COMMERCE: Major industrialized economies accepted 15 percent duties on their products, while charges on items from Mexico, Canada and China are even bigger US President Donald Trump has unveiled a slew of new tariffs that boosted the average US rate on goods from across the world, forging ahead with his turbulent effort to reshape international commerce. The baseline rates for many trading partners remain unchanged at 10 percent from the duties Trump imposed in April, easing the worst fears of investors after the president had previously said they could double. Yet his move to raise tariffs on some Canadian goods to 35 percent threatens to inject fresh tensions into an already strained relationship, while nations such as Switzerland and New Zealand also saw increased
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