European stocks slumped to their lowest in two months on Friday, as warnings from companies and factory activity data highlighted the economic headwinds from supply-chain constraints and elevated prices.
The Europe-wide STOXX 600 fell 0.4 percent in a weak start to October, which has traditionally been a rough month for equities, with technology, miners and banks leading broad declines.
The STOXX 600 ended the week down 2.2 percent.
Online electricals retailer AO World PLC tumbled 24.3 percent, saying that a shortage of delivery drivers in Britain and other disruptions in the global supply chain hit revenue growth in the first half of the year.
Meanwhile, a survey showed that eurozone manufacturing growth remained strong last month, but activity took a big hit from supply chain bottlenecks, which are likely to persist and keep inflationary pressures high.
“Just because it appears the ECB [European Central Bank] will maintain its policy for the foreseeable future, doesn’t mean that higher inflation should be ignored,” Equiti Capital UK Ltd market analyst David Madden said.
Underwhelming figures from Asian factories and overnight losses on Wall Street dented the global mood as investors awaited a report that is expected to show eurozone inflation surged to a 13-year high.
With government bond yields surging to multimonth highs and concerns about inflation coming to the fore, the benchmark STOXX 600 closed last month 3.4 percent lower in its worst monthly showing in almost a year.
“For equities, this combination of slowing growth — albeit at a high level of demand — rising inflation and higher bond yields has meant slightly higher volatility, lower market returns and a rotation beneath the surface,” Goldman Sachs strategist Sharon Bell said in a note. “It hasn’t helped that earnings revisions have also started to slow from their frenetic pace earlier in the year.”
Bank of America Global Research cut its outlook for European stocks, predicting a decline of nearly 10 percent by year-end given a shift in the macro backdrop toward “anti-goldilocks,” where slowing growth is accompanied by higher discount rates.
BMW AG rose 1.3 percent after lifting its annual profit margin forecast as higher prices for new and used vehicles outweighed the effect of supply-chain issues.
French state-owned utility EDF SA and energy group Engie SA rose 5.9 percent and 2.5 percent respectively, with traders pointing to relief that electricity tariffs were untouched by the French government in its plan to check further price rises.
France’s biggest telecoms group Orange SA fell 0.8 percent after it said it would buy insurer Groupama’s 21.7 percent stake in Orange Bank, its online banking unit.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, has decided to slow down its 3-nanometer chip production as Intel Corp, one of its major customers, plans to push back the launch of its new Meteor Lake tGPU chipsets to the end of next year, market researcher TrendForce Corp (集邦科技) said yesterday. That means Intel has canceled almost all of the 3-nanometer capacity booked for next year, with only a small amount of wafer input remaining for engineering verification, the Taipei-based researcher said in a report. Based on Intel’s original schedule, TSMC was to start producing the new chipsets in
DATA SHOW DOWNTURN: Manufacturing in Taiwan contracted as production and demand slumped, while growth in chip exports last month eased in South Korea World chip sales growth has decelerated for six straight months in another sign that the global economy is straining under the weight of rising interest rates and mounting geopolitical risks. Semiconductor sales rose 13.3 percent in June from a year earlier, down from 18 percent in May, data from the global peak industry body showed. The slowdown is the longest since the US-China trade dispute in 2018. The three-month moving average in chip sales has correlated with the global economy’s performance in the past few decades. The latest weakness comes as concern about a worldwide recession has prompted chipmakers such as Samsung
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Italy is close to clinching a deal initially worth US$5 billion with Intel Corp to build an advanced semiconductor packaging and assembly plant in the country, two sources briefed on discussions said yesterday. Intel’s investment in Italy is part of a wider plan announced by the US chipmaker earlier this year to invest US$88 billion in building capacity across Europe, which is striving to cut its reliance on Asian chip imports and ease a supply crunch that has curbed output in the region’s strategic auto sector. Asking not to be named due to the sensitivity of the matter, the sources said the
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