European stocks fell on Friday on nervousness around the Omicron variant of SARS-CoV-2, while the US inflation reading coming in broadly in line with expectations did little to allay uncertainty around US monetary policy.
The pan-European STOXX 600 slipped 0.3 percent, down for third straight session on worries that measures to curb the spread of the Omicron variant could hit economic recovery.
However, a strong two-day gain at the beginning of the week saw the index post the best weekly gain since March, up 2.8 percent.
Data on Friday showed that US annual consumer prices rose further to 6.8 percent — the biggest year-on-year rise since June 1982 and followed a 6.2 percent advance in October.
“It looks to be a subdued end to the week ... as stocks pause for breath following the big gains in the first half of the week,” said Chris Beauchamp, chief market analyst at IG.
“US CPI [consumer price index] came in line with expectations, but prices continue to rise, meaning that while the pressure on the Fed to raise rates hasn’t increased much as a result of today’s data, it doesn’t really lessen it either,” he said.
On the contrary, news that the European Central Bank is widely considering a temporary increase to its bond purchase plan at a policy meeting next week was seen as a dovish step.
Technology and retail were the top decliners in Europe on Friday.
“We think the path for equities is lower over the next 12 months,” said Milla Savova, European equity strategist at Bank of America. “Real bond yields will come up from record lows as the Fed turns more hawkish and the market starts to price in a sharper-than-expected Fed hiking cycle.”
Auto stocks were led higher by Daimler AG, which rose 2.9 percent after spun-off Daimler Truck climbed in its market debut on the Frankfurt Stock Exchange.
Gains for the sector came even as data showed that China’s auto sales dropped 9.1 percent last month, marking their seventh consecutive monthly fall, as a prolonged global shortage of semiconductors disrupted production.
Tobacco group Swedish Match AB jumped 7.2 percent after the Wall Street Journal reported that US Democrats dropped a proposed vaping tax that would have taxed e-cigarettes like regular ones.
Food delivery companies Deliveroo Holdings PLC and Just Eat Takeaway.com NV slipped 2.4 percent and 3.2 percent respectively, adding to losses in the past week on worries that a European Commission ruling on gig economy drivers would hurt profits.
Polish fashion retailer LPP Spolka Akcyjna jumped 10.2 percent to hit a fresh record high, extending Thursday’s rally after strong third-quarter results.
TARIFF TRADE-OFF: Machinery exports to China dropped after Beijing ended its tariff reductions in June, while potential new tariffs fueled ‘front-loaded’ orders to the US The nation’s machinery exports to the US amounted to US$7.19 billion last year, surpassing the US$6.86 billion to China to become the largest export destination for the local machinery industry, the Taiwan Association of Machinery Industry (TAMI, 台灣機械公會) said in a report on Jan. 10. It came as some manufacturers brought forward or “front-loaded” US-bound shipments as required by customers ahead of potential tariffs imposed by the new US administration, the association said. During his campaign, US president-elect Donald Trump threatened tariffs of as high as 60 percent on Chinese goods and 10 percent to 20 percent on imports from other countries.
Taiwanese manufacturers have a chance to play a key role in the humanoid robot supply chain, Tongtai Machine and Tool Co (東台精機) chairman Yen Jui-hsiung (嚴瑞雄) said yesterday. That is because Taiwanese companies are capable of making key parts needed for humanoid robots to move, such as harmonic drives and planetary gearboxes, Yen said. This ability to produce these key elements could help Taiwanese manufacturers “become part of the US supply chain,” he added. Yen made the remarks a day after Nvidia Corp cofounder and chief executive officer Jensen Huang (黃仁勳) said his company and Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) are jointly
United Microelectronics Corp (UMC, 聯電) expects its addressable market to grow by a low single-digit percentage this year, lower than the overall foundry industry’s 15 percent expansion and the global semiconductor industry’s 10 percent growth, the contract chipmaker said yesterday after reporting the worst profit in four-and-a-half years in the fourth quarter of last year. Growth would be fueled by demand for artificial intelligence (AI) servers, a moderate recovery in consumer electronics and an increase in semiconductor content, UMC said. “UMC’s goal is to outgrow our addressable market while maintaining our structural profitability,” UMC copresident Jason Wang (王石) told an online earnings
MARKET SHIFTS: Exports to the US soared more than 120 percent to almost one quarter, while ASEAN has steadily increased to 18.5 percent on rising tech sales The proportion of Taiwan’s exports directed to China, including Hong Kong, declined by more than 12 percentage points last year compared with its peak in 2020, the Ministry of Finance said on Thursday last week. The decrease reflects the ongoing restructuring of global supply chains, driven by escalating trade tensions between Beijing and Washington. Data compiled by the ministry showed China and Hong Kong accounted for 31.7 percent of Taiwan’s total outbound sales last year, a drop of 12.2 percentage points from a high of 43.9 percent in 2020. In addition to increasing trade conflicts between China and the US, the ministry said
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