European stocks on Friday closed lower, ending three weeks of gains as investors booked profits in technology and commodity-linked shares due to concerns over rising inflation and interest rates on the back of a jump in bond yields.
The benchmark STOXX 600 fell 1.64 percent to 404.99 and shed 2.38 percent for the week — its first weekly loss this month — with technology stocks losing the most as they continued to retreat from 20-year highs.
On the day, resource stocks were the softest-performing European sectors, tumbling 4.2 percent from a near 10-year high in their worst session in five months.
“Equity markets across the US and Europe are quite expensive now, and with bond yields constantly rising, the fixed income market is proving to be more attractive than the riskier equity market,” Societe Generale SA strategist Roland Kaloyan said. “Investors are actually looking at the pace at which yields drop and the current speed is quite concerning for equity markets.”
US and eurozone bond yields retreated slightly, but stayed close to highs hit this week as investors positioned for higher inflation this year. Yields were also set for large monthly gains.
BETTER RETURNS
Sectors such as utilities, healthcare and other staples — usually seen as proxies for government debt due to their similar yields — lagged their European peers for the month as investors sought better returns from actual debt.
Still, the STOXX 600 has gained this month, helped by a rotation into energy, banking and mining stocks on expectations of a pickup in business activity following COVID-19 vaccine rollouts.
Travel and leisure was the strongest sector this month as investors bet on an economic reopening boom. Banks also outperformed their peers thanks to higher bond yields.
Better-than-expected fourth-quarter earnings have also reinforced optimism about a quicker corporate rebound this year.
Of the 194 companies in the STOXX 600 that have reported quarterly earnings so far, 68 percent have beaten analysts’ estimates, according to Refinitiv.
In London, the export-heavy FTSE 100 marked its weakest session since late October last year, snapping three straight weeks of gains.
MINING STOCKS DOWN
The FTSE 100 slipped 2.53 percent to 6,483.43, declining 2.12 percent from a week earlier.
Mining stocks, including Rio Tinto Group, Anglo American PLC and BHP, were the biggest drags on the index, while oil heavyweights BP PLC and Royal Dutch Shell fell, tracking a decline in oil and metal prices.
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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
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
STILL UNCLEAR: Several aspects of the policy still need to be clarified, such as whether the exemptions would expand to related products, PwC Taiwan warned The TAIEX surged yesterday, led by gains in Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), after US President Donald Trump announced a sweeping 100 percent tariff on imported semiconductors — while exempting companies operating or building plants in the US, which includes TSMC. The benchmark index jumped 556.41 points, or 2.37 percent, to close at 24,003.77, breaching the 24,000-point level and hitting its highest close this year, Taiwan Stock Exchange (TWSE) data showed. TSMC rose NT$55, or 4.89 percent, to close at a record NT$1,180, as the company is already investing heavily in a multibillion-dollar plant in Arizona that led investors to assume
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