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.
RECYCLE: Taiwan would aid manufacturers in refining rare earths from discarded appliances, which would fit the nation’s circular economy goals, minister Kung said Taiwan would work with the US and Japan on a proposed cooperation initiative in response to Beijing’s newly announced rare earth export curbs, Minister of Economic Affairs Kung Ming-hsin (龔明鑫) said yesterday. China last week announced new restrictions requiring companies to obtain export licenses if their products contain more than 0.1 percent of Chinese-origin rare earths by value. US Secretary of the Treasury Scott Bessent on Wednesday responded by saying that Beijing was “unreliable” in its rare earths exports, adding that the US would “neither be commanded, nor controlled” by China, several media outlets reported. Japanese Minister of Finance Katsunobu Kato yesterday also
Jensen Huang (黃仁勳), founder and CEO of US-based artificial intelligence chip designer Nvidia Corp and Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) on Friday celebrated the first Nvidia Blackwell wafer produced on US soil. Huang visited TSMC’s advanced wafer fab in the US state of Arizona and joined the Taiwanese chipmaker’s executives to witness the efforts to “build the infrastructure that powers the world’s AI factories, right here in America,” Nvidia said in a statement. At the event, Huang joined Y.L. Wang (王英郎), vice president of operations at TSMC, in signing their names on the Blackwell wafer to
‘DRAMATIC AND POSITIVE’: AI growth would be better than it previously forecast and would stay robust even if the Chinese market became inaccessible for customers, it said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday raised its full-year revenue growth outlook after posting record profit for last quarter, despite growing market concern about an artificial intelligence (AI) bubble. The company said it expects revenue to expand about 35 percent year-on-year, driven mainly by faster-than-expected demand for leading-edge chips for AI applications. The world’s biggest contract chipmaker in July projected that revenue this year would expand about 30 percent in US dollar terms. The company also slightly hiked its capital expenditure for this year to US$40 billion to US$42 billion, compared with US$38 billion to US$42 billion it set previously. “AI demand actually
RARE EARTHS: The call between the US Treasury Secretary and his Chinese counterpart came as Washington sought to rally G7 partners in response to China’s export controls China and the US on Saturday agreed to conduct another round of trade negotiations in the coming week, as the world’s two biggest economies seek to avoid another damaging tit-for-tat tariff battle. Beijing last week announced sweeping controls on the critical rare earths industry, prompting US President Donald Trump to threaten 100 percent tariffs on imports from China in retaliation. Trump had also threatened to cancel his expected meeting with Chinese President Xi Jinping (習近平) in South Korea later this month on the sidelines of the APEC summit. In the latest indication of efforts to resolve their dispute, Chinese state media reported that
RSS