European shares slid on Friday, with Italian stocks 2.5 percent lower on political uncertainty, while comments by US President Donald Trump that he was not going to make a trade deal with China also weighed on sentiment.
Italy’s main index touched a two-month low, with its bank index tumbling 4.5 percent after the leader of the ruling League party, Matteo Salvini, pulled his support for the country’s governing coalition on Thursday and called for fresh elections.
Italy’s budget crisis and prospect of ultra-low interest rates for longer have already damaged bank stocks’ valuations and the fresh political concerns sent the bank index to its lowest since September 2016.
Italian 10-year government bond yields posted their biggest weekly rise this year.
“It leads to uncertainty, because obviously we don’t know when it will be possible for Italy to improve their budget because they’ve only just come to an agreement with Brussels, which could very easily be upended,” Rabobank NV head of macro strategy Elwin de Groot said.
Along with drops of more than 1 percent in most other major indices, including trade-sensitive German stocks, the pan-European STOXX 600 gave up 0.8 percent, in line with a move lower in world stocks.
Trump’s remarks on a trade deal with China followed a report that said Washington was delaying a decision to allow some trade between US firms and China’s telecom equipment maker Huawei Technologies Co (華為) again.
This added to worries about an escalation in trade tensions between the world’s two biggest economies, which has seen the STOXX 600 fall 1.7 percent over the week as investors worried over a prolonged impact on global economic growth.
Sectors most exposed to China and trade issues, such as technology, basic materials and automakers, led losses in Europe along with banks.
“It is a risk-off sentiment, but investors aren’t desperate yet ... it’s more like the realization that we are in for a rough ride,” De Groot said.
However, losses on London’s FTSE were limited by a rally in healthcare stocks and a 7.2 percent surge in advertising company WPP PLC after it reported improved second-quarter trading.
The rise in the healthcare index came after strong results from Hikma Pharma PLC and Carl Zeiss SMT GmbH, and was also helped by a 2.6 percent rise in Bayer AG.
The British pound was hit by data showing that the UK’s economy experienced a shock contraction in the second quarter in a severe hangover from a pre-Brexit stockpiling boost.
EXTRATERRITORIAL REACH: China extended its legal jurisdiction to ban some dual-use goods of Chinese origin from being sold to the US, even by third countries Beijing has set out to extend its domestic laws across international borders with a ban on selling some goods to the US that applies to companies both inside and outside China. The new export control rules are China’s first attempt to replicate the extraterritorial reach of US and European sanctions by covering Chinese products or goods with Chinese parts in them. In an announcement this week, China declared it is banning the sale of dual-use items to the US military and also the export to the US of materials such as gallium and germanium. Companies and people overseas would be subject to
DOLLAR CHALLENGE: BRICS countries’ growing share of global GDP threatens the US dollar’s dominance, which some member states seek to displace for world trade US president-elect Donald Trump on Saturday threatened 100 percent tariffs against a bloc of nine nations if they act to undermine the US dollar. His threat was directed at countries in the so-called BRICS alliance, which consists of Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran and the United Arab Emirates. Turkey, Azerbaijan and Malaysia have applied to become members and several other countries have expressed interest in joining. While the US dollar is by far the most-used currency in global business and has survived past challenges to its preeminence, members of the alliance and other developing nations say they are fed
TECH COMPETITION: The US restricted sales of two dozen types of manufacturing equipment and three software tools, and blacklisted 140 more Chinese entities US President Joe Biden’s administration unveiled new restrictions on China’s access to vital components for chips and artificial intelligence (AI), escalating a campaign to contain Beijing’s technological ambitions. The US Department of Commerce slapped additional curbs on the sale of high-bandwidth memory (HBM) and chipmaking gear, including that produced by US firms at foreign facilities. It also blacklisted 140 more Chinese entities that it accused of acting on Beijing’s behalf, although it did not name them in an initial statement. Full details on the new sanctions and Entity List additions were to be published later yesterday, a US official said. The US “will
COLLABORATION: The operations center shows the close partnership between Taiwan and Japan in the field of semiconductors, Minister of Economic Affairs J.W. Kuo said Tokyo Electron Ltd, Asia’s biggest semiconductor equipment supplier, yesterday launched a NT$2 billion (US$61.5 million) operations center in Tainan as it aims to expand capacity and meet growing demand. Its new Taiwan Operations Center is expected to help customers release their products faster, boost production efficiency and shorten equipment repair time in a cost-effective way, the company said. The center is about a five-minute drive from the factories of its major customers such as Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) advanced 3-nanometer and 2-nanometer fabs. The operations center would have about 1,000 employees when it is fully utilized, the company
RSS