Losses in technology stocks dragged European shares down on Friday, after red-hot US inflation drove up bond yields, although a positive earnings season and strong commodity prices helped the STOXX 600 log its first weekly gain this year.
The pan-European STOXX 600 index closed 0.59 percent lower at 469.57, but added 1.61 percent for the week, its best weekly showing since late December last year.
Tech stocks fell 2.2 percent, the most among their peers on Friday. The sector, along with utilities, was among the worst performers this week, under pressure from elevated debt yields.
Bond yields spiked after data showed that US inflation jumped this month, while hawkish comments from US Federal Reserve officials also raised expectations for a sharp rate hike next month.
“Strong quarterly earnings in Europe could dampen the sell-off, but until fears about a more aggressive response from the FOMC [US Federal Open Market Committee] dissipate, markets will remain under pressure,” Equiti Capital head macro economist Stuart Cole said.
However, “the Fed will do everything it can to avoid spooking the market ... akin to what we saw last month, and that means treading carefully,” Cole added.
European bond yields retreated after sharp gains on Thursday.
European Central Bank (ECB) President Christine Lagarde said that raising the ECB’s main interest rate now would not bring down record-high eurozone inflation and only hurt the economy.
Meanwhile, the German Association of German Chambers of Industry and Commerce on Friday cut its growth forecast for this year for Europe’s biggest economy to 3 percent from the 3.6 percent it had predicted in October last year, due to rising energy prices, raw material shortages and a lack of skilled workers.
Travel and leisure stocks were the best performers this week, up 7.4 percent on optimism about the easing of mask mandates in some US states.
Heavyweight mining stocks were also among the top performers this week, as expectations of improving demand in China drove up commodity prices.
In the UK, the blue-chip FTSE 100 slipped 0.15 percent to 7,661.02, but gained 1.92 percent from a week earlier.
The FTSE 100 has outperformed the STOXX 600 index this year, thanks to its heavy weighting toward banking and commodity stocks.
Britain’s economy shrank by a less-than-expected 0.2 percent in December, suggesting that — despite setbacks caused by the Omicron variant of SARS-CoV-2 — GDP grew well across the fourth quarter, data showed.
“The last month of the year wasn’t all doom and gloom ... and looking over the last quarter as a whole, there’s plenty to be positive about,” AJ Bell financial analyst Danni Hewson said.
The question now is whether this year would see the UK shake off December’s blip or whether supply constraints and rising prices would keep a lid on household consumption, which has been a key factor in GDP growth, Hewson added.
HORMUZ ISSUE: The US president said he expected crude prices to drop at the end of the war, which he called a ‘minor excursion’ that could continue ‘for a little while’ The United Arab Emirates (UAE) and Kuwait started reducing oil production, as the near-closure of the crucial Strait of Hormuz ripples through energy markets and affects global supply. Abu Dhabi National Oil Co (ADNOC) is “managing offshore production levels to address storage requirements,” the company said in a statement, without giving details. Kuwait Petroleum Corp said it was lowering production at its oil fields and refineries after “Iranian threats against safe passage of ships through the Strait of Hormuz.” The war in the Middle East has all but closed Hormuz, the narrow waterway linking the Persian Gulf to the open seas,
Apple Inc increased iPhone production in India by about 53 percent last year and now makes a quarter of its marquee devices there, reflecting the US company’s efforts to avoid tariffs on China. The company assembled about 55 million iPhones in India last year, up from 36 million a year earlier, people familiar with the matter said, asking not to be named because the numbers aren’t public. Apple makes about 220 million to 230 million iPhones a year globally, with India’s share of the total increasing rapidly. Apple has accelerated its expansion in the world’s most populous country in recent years, bolstered
HEADWINDS: The company said it expects its computer business, as well as consumer electronics and communications segments to see revenue declines due to seasonality Pegatron Corp (和碩) yesterday said it aims to grow its artificial intelligence (AI) server revenue more than 10-fold this year from last year, driven by orders from neocloud solutions clients and large cloud service providers. The electronics manufacturing service provider said AI server revenue growth would be driven primarily by the Nvidia Corp GB300 server platform. Server shipments are expected to increase each quarter this year, with the second half likely to outperform the first half, it said. The AI server market is expected to broaden this year as more inference applications emerge, which would drive demand for system-on-chip, application-specific integrated circuits
PROJECTION: TSMC said it expects strong growth this year, with revenue in US dollars projected to grow by about 30 percent, outperforming the industry Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reported consolidated sales last month reached NT$317.66 billion (US$9.98 billion), the highest ever for the month of February, driven by robust demand for chips built using the company’s advanced 3-nanometer (3nm) process. Last month’s figure was up 22.2 percent from a year earlier, but fell 20.8 percent from January, the world’s largest contract chipmaker said in a statement. For the first two months of the year, TSMC posted cumulative sales of NT$718.91 billion, up 29.9 percent from a year earlier. Analysts attributed the growth to sustained global demand for artificial intelligence (AI) products
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