European stocks fell on Friday, as worries about troubled property developer China Evergrande Group (恆大集團) and weak German business confidence data prompted investors to book some profits after a mid-week rally.
European sportswear makers Adidas AG, Puma SE and JD Sports Fashion PLC fell about 3 percent each after US rival Nike Inc cut its fiscal 2022 sales expectations and predicted delays during the holiday shopping season due to a supply chain crunch.
Retail stocks were the top decliners in Europe, down 1.7 percent, while the region-wide STOXX 600 fell 0.9 percent to 463.29, but a three-day rally put the index 0.31 percent higher for the week.
“Equities have rallied to take a pause early this morning faced with the likely default of Evergrande,” Nordea Asset Management senior macro strategist Sebastien Galy said.
Meanwhile, a survey by Ifo Institute showed German business morale this month fell for a third straight month, hit by supply chain woes that are causing a “bottleneck recession” for manufacturers in Europe’s largest economy.
Germany’s DAX fell 0.72 percent to 15,531.75, up 0.27 percent from a week earlier, heading into the weekend when the country votes to elect German Chancellor Angela Merkel’s successor.
“Some of the hesitancy in European markets could also be put down to the German elections, which promise to be the most interesting in some time,” IG chief market analyst Chris Beauchamp said.
“Markets are facing a change of direction in Germany unlike anything seen in the past decade or more, and the end of Merkel’s tenure promises to be a watershed moment for the EU and global investors alike,” Beauchamp added.
The benchmark STOXX 600 is on course to end the month in the red after seven consecutive months of gains, as rising energy prices and supply-chain bottlenecks fed into fears of inflation, while major central banks plan to cut COVID-19 stimulus.
However, European Central Bank President Christine Lagarde said in an interview aired on CNBC that many of the drivers of a recent spike in eurozone inflation are temporary and could fade in the next year.
London’s FTSE 100 ended lower as concerns about a slowdown in global economic growth outweighed gains in healthcare and energy stocks.
It eased 0.38 percent to 7,051.48, but posted a weekly increase of 1.26 percent, snapping a three-week losing streak.
Retailers, industrial miners and life insurers were the top losers.
The FTSE 100 has gained nearly 9.5 percent so far this year on higher energy prices and accommodative central bank policies.
However, it has significantly underperformed a 17 percent rise among its European peers.
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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