European stocks declined for a second week as higher oil dimmed the earnings outlook for automakers and retailers and concerns deepened that banks will report more losses.
Bayerische Motoren Werke AG and Carrefour SA, the world’s second-largest retailer, declined more than 3 percent as oil soared as much as US$8.27 a barrel this week. Anglo Irish Bank Plc led a retreat in financial shares as Citigroup Inc predicted three US investment banks will write down a combined US$6.4 billion this quarter and speculation mounted that a government bailout of Fannie Mae and Freddie Mac would leave the shares worthless.
The Dow Jones Stoxx 600 Index lost 1.2 percent to 283.82 this week, extending its slump this year to 22 percent. Financial firms have led the decline on concerns that accelerating inflation and more than US$500 billion in credit-related losses will stifle profits.
“After all the bad things we’ve had this week, the oil price is shaking the market again,” said Roger Kunz, head of investment strategy at Clariden Leu in Zurich, Switzerland, which manages the equivalent of US$120 billion in assets. “Markets are extremely nervous at the moment. That’s why they react very negatively, because the situation remains very fragile.”
National benchmark indexes declined in 15 of the 18 western European markets. Germany’s DAX slipped 1.6 percent and France’s CAC 40 fell 1.2 percent. A rally in commodity producers sent the UK’s FTSE 100 0.9 percent higher.
BMW, the world’s largest maker of luxury cars, fell 3.2 percent while Porsche SE, the maker of the 911 sports car, retreated 2.4 percent. Carrefour lost 5.6 percent and Metro AG, Germany’s largest retailer, slid 5 percent.
Crude oil rose as much as 7.3 percent this week in New York as a weakening dollar revived demand for raw materials as alternative investments. The Reuters/Jefferies CRB Index of 19 commodities soared 3.7 percent to a three-week high of 405.92 in New York on Thursday.
Anglo Irish, Ireland’s third-largest lender by market value, lost 15 percent while Royal Bank of Scotland Plc, the UK’s second- biggest bank, fell 5.2 percent. The Dow Jones Stoxx Banks Index dropped 4 percent this week, extending its slump this year to 32 percent.
Citigroup analyst Prashant Bhatia cut his third-quarter earnings estimates for Lehman Brothers Holdings Inc, Goldman Sachs Group Inc and Morgan Stanley. Separately, JPMorgan Chase & Co said Lehman may write down about US$4 billion in credit-related investments this quarter as the mortgage market deteriorates.
Billionaire Warren Buffett told CNBC that Fannie Mae and Freddie Mac “don’t have any net worth.”
STILL COMMITTED: The US opposes any forced change to the ‘status quo’ in the Strait, but also does not seek conflict, US Secretary of State Marco Rubio said US President Donald Trump’s administration released US$5.3 billion in previously frozen foreign aid, including US$870 million in security exemptions for programs in Taiwan, a list of exemptions reviewed by Reuters showed. Trump ordered a 90-day pause on foreign aid shortly after taking office on Jan. 20, halting funding for everything from programs that fight starvation and deadly diseases to providing shelters for millions of displaced people across the globe. US Secretary of State Marco Rubio, who has said that all foreign assistance must align with Trump’s “America First” priorities, issued waivers late last month on military aid to Israel and Egypt, the
France’s nuclear-powered aircraft carrier and accompanying warships were in the Philippines yesterday after holding combat drills with Philippine forces in the disputed South China Sea in a show of firepower that would likely antagonize China. The Charles de Gaulle on Friday docked at Subic Bay, a former US naval base northwest of Manila, for a break after more than two months of deployment in the Indo-Pacific region. The French carrier engaged with security allies for contingency readiness and to promote regional security, including with Philippine forces, navy ships and fighter jets. They held anti-submarine warfare drills and aerial combat training on Friday in
COMBAT READINESS: The military is reviewing weaponry, personnel resources, and mobilization and recovery forces to adjust defense strategies, the defense minister said The military has released a photograph of Minister of National Defense Wellington Koo (顧立雄) appearing to sit beside a US general during the annual Han Kuang military exercises on Friday last week in a historic first. In the photo, Koo, who was presiding over the drills with high-level officers, appears to be sitting next to US Marine Corps Major General Jay Bargeron, the director of strategic planning and policy of the US Indo-Pacific Command, although only Bargeron’s name tag is visible in the seat as “J5 Maj General.” It is the first time the military has released a photo of an active
CHANGE OF MIND: The Chinese crew at first showed a willingness to cooperate, but later regretted that when the ship arrived at the port and refused to enter Togolese Republic-registered Chinese freighter Hong Tai (宏泰號) and its crew have been detained on suspicion of deliberately damaging a submarine cable connecting Taiwan proper and Penghu County, the Coast Guard Administration said in a statement yesterday. The case would be subject to a “national security-level investigation” by the Tainan District Prosecutors’ Office, it added. The administration said that it had been monitoring the ship since 7:10pm on Saturday when it appeared to be loitering in waters about 6 nautical miles (11km) northwest of Tainan’s Chiang Chun Fishing Port, adding that the ship’s location was about 0.5 nautical miles north of the No.
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