European stocks posted their biggest weekly gain since December last year, fueled by the first-round win of a pro-euro candidate in the French presidential election and a raft of stronger corporate earnings.
The STOXX Europe 600 on Friday slipped 0.2 percent, reducing the five-day gain to 2.4 percent, after eurozone consumer prices rose slightly more than expected, failing to stir markets after European Central Bank President Mario Draghi said inflation was still too weak to rein in stimulus.
Stocks on Monday rallied the most since June last year after a political centrist won the first round of French election.
Robust corporate earnings from companies, including Credit Suisse Group AG and Volvo AB, also bolstered markets.
European markets are to be closed on Monday for the Workers’ Day holiday.
With about one-third of companies having reported earnings so far this season among STOXX 600 members, earnings per share has jumped an annual 24 percent, on track to be the biggest increase since the third quarter of 2010, according to data from JPMorgan Asset Management strategists Emmanuel Cau and Mislav Matejka.
“The hard data for equities is earnings — and they are powering ahead. Q1 earnings season is very strong and revisions trends are positive and broad-based,” said analysts at Bank of America Merrill Lynch (BofA Merrill Lynch), who forecast 15 percent earnings growth for European companies and a further 8 percent rally for the STOXX 600.
Draghi on Thursday showed growing enthusiasm about the state of the eurozone economy, while saying that inflationary pressures remain too weak to contemplate paring back monetary stimulus.
Eurozone consumer prices this month rose an annual 1.9 percent, exceeding the estimate from economists for 1.8 percent.
Investors poured US$2.4 billion into European equity funds in the week through Wednesday, the most since December 2015, according to a BofA Merrill Lynch note.
There is a significant opportunity in the region’s equities, as the French election is likely to drive a lower risk premium and support “risk on” trade across the region, Citigroup’s equity strategists, including Jonathan Stubbs, wrote in note.
Among the most active shares, Barclays PLC dropped 5.2 percent, the most since June last yaer, after trading revenue declined surprisingly in the first quarter.
Additional reporting by Reuters
RESTRUCTURING: Taichung and Taoyuan profited most from local firms moving back high-end manufacturing amid the US-China decoupling of trade ties, the ministry said The government’s “Invest in Taiwan” initiative might this year see NT$627.1 billion (US$21.7 billion) of investment pledges realized, with several firms raising stakes and two dropouts due to customer losses, Minister of Economic Affairs (MOEA) Wang Mei-hua (王美花) said yesterday. Wang made the statement at the monthly meeting of the Third Wednesday Club, a local trade group featuring the top 100 firms of each business sector. Since early last year, the government has launched three programs intended to help local companies grapple with US-China trade rows and the COVID-19 pandemic, mainly through moving production lines back to Taiwan. Thus far, the ministry
JOBS AT RISK? Most Cathay Dragon routes are to be operated by Cathay Pacific or a subsidiary, but it was unclear how Taiwanese workers would be affected Cathay Pacific Airways Ltd (國泰航空) yesterday said it is planning new flight services for Taiwan as it announced a corporate restructuring that included the shutdown of its regional subsidiary, Cathay Dragon (國泰港龍), and could lead to job cuts in Taiwan. Cathay Pacific said the shutdown means that the one round-trip service between Taichung and Hong Kong per day and seven round-trip services between Kaohsiung and Hong Kong operated by Cathay Dragon prior to the COVID-19 pandemic would be terminated. “The parent company is planning a new schedule between Taiwan and Hong Kong,” Cathay Pacific assistant manager for corporate communications Moses Hou (侯恩錫)
OVERHEATED MARKET?: The gauge would be designed to provide more reliable information than private-sector data, and help improve policymaking, the council said The National Development Council (NDC) is considering creating a business climate index on Taiwan’s property market, allowing policymakers to better monitor market movements and intervene if necessary, NDC Minister Kung Ming-hsin (龔明鑫) said yesterday. Kung made the remarks at a meeting of the legislature’s Economic Committee where lawmakers from across party lines voiced concerns about housing price hikes driven by capital repatriation. Kung said that the council is assessing the possibility of creating an index designed to provide more accountable and transparent information than data provided by private-sector market analysts, and could help improve policymaking. The council would compile a report on
STOCK MARKETS TAIEX closes slightly higher The TAIEX closed slightly higher yesterday as market sentiment remained cautious over the Nov. 3 US presidential election. Contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) was again the anchor stabilizing the broader market, preventing the main board from falling into negative territory at the end of the session, dealers said. The TAIEX closed up 14.88 points, or 0.12 percent, at 12,877.25, on turnover of NT$167.982 billion (US$5.81 billion). TSMC, the most heavily weighted stock on the local market, rose 0.44 percent after fluctuating between NT$451 and NT$456. The semiconductor subindex and the bellwether electronics sector