European stocks posted their biggest weekly rally since April as the US Federal Reserve’s decision to reduce its monthly bond purchases increased investors’ confidence in the strength of the recovery of the world’s No. 1 economy.
Cable & Wireless Communications PLC surged 16 percent after UK newspapers named it as a potential acquisition target, while Carnival PLC jumped 10 percent after the world’s largest cruise ship operator posted quarterly sales that beat estimates. On the other end, CGG SA slumped 15 percent after the world’s biggest seismic surveyor of oilfields cut its earnings forecast for this year.
The STOXX Europe 600 Index rose 3.7 percent to 321.14 this past week, trimming its decline from the beginning of the month to 1.2 percent.
The equity benchmark has gained 15 percent this year and is on course for its best annual performance since 2009, as central bankers around the world pledged to leave interest rates near record lows for a prolonged period.
“People who were uncertain about European equities hesitated because of tapering and there has just been relief since the announcement,” said Steven Bell, a London-based fund manager at F&C Asset Management PLC. “This year has been about fears not being realized. The tapering talks earlier in the year caused a major wobble, but now people have gotten used to it. It’s another year the European economy hasn’t fallen apart.”
National benchmark indices rose in every western European market except Greece and Iceland this week. The UK’s FTSE 100 Index advanced 2.6 percent, France’s CAC 40 gained 3.3 percent and Germany’s DAX jumped 4.4 percent.
“When financial markets see a relatively healthy economy, they would like to have some of the emergency life support removed,” Toby Nangle, head of multi-asset allocation at Threadneedle Asset Management Ltd in London, said by telephone.
Also this week, an EU report showed that eurozone factory output grew at a faster pace this month than economists had forecast.
Markit Economics’ Purchasing Managers’ Index also beat estimates by climbing to 52.7, as did a measure of manufacturing in Germany, the continent’s largest economy, which rose to 54.2 this month. Readings above 50 mean that activity increased.
The biggest news of the week was the EU’s finance ministers reaching an agreement late on Wednesday on how to deal with cross-border banks that fail. The meeting pledged to set up a 55 billion euro (US$75 billion) industry-financed fund for the next decade.
The ministers also agreed to establish an agency to make decisions on handling failing banks and when to share costs.
Taiwan’s technology protection rules prohibits Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) from producing 2-nanometer chips abroad, so the company must keep its most cutting-edge technology at home, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. Kuo made the remarks in response to concerns that TSMC might be forced to produce advanced 2-nanometer chips at its fabs in Arizona ahead of schedule after former US president Donald Trump was re-elected as the next US president on Tuesday. “Since Taiwan has related regulations to protect its own technologies, TSMC cannot produce 2-nanometer chips overseas currently,” Kuo said at a meeting of the legislature’s
TECH WAR CONTINUES: The suspension of TSMC AI chips and GPUs would be a heavy blow to China’s chip designers and would affect its competitive edge Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, is reportedly to halt supply of artificial intelligence (AI) chips and graphics processing units (GPUs) made on 7-nanometer or more advanced process technologies from next week in order to comply with US Department of Commerce rules. TSMC has sent e-mails to its Chinese AI customers, informing them about the suspension starting on Monday, Chinese online news outlet Ijiwei.com (愛集微) reported yesterday. The US Department of Commerce has not formally unveiled further semiconductor measures against China yet. “TSMC does not comment on market rumors. TSMC is a law-abiding company and we are
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US President Joe Biden’s administration is racing to complete CHIPS and Science Act agreements with companies such as Intel Corp and Samsung Electronics Co, aiming to shore up one of its signature initiatives before US president-elect Donald Trump enters the White House. The US Department of Commerce has allocated more than 90 percent of the US$39 billion in grants under the act, a landmark law enacted in 2022 designed to rebuild the domestic chip industry. However, the agency has only announced one binding agreement so far. The next two months would prove critical for more than 20 companies still in the process
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