European stocks fell this past week, led by financial companies and commodity producers on concern corporate earnings may deteriorate further as the global economic slowdown deepens.
BNP Paribas SA tumbled 31 percent after saying losses at its investment bank since October more than wiped out the division’s profit this year.
Royal Bank of Scotland Group Plc lost 23 percent after disclosing investments with Bernard Madoff, the investment adviser who was arrested in a potential US$50 billion fraud. BG Group Plc and Xstrata Plc both sank more than 3 percent as crude oil plunged below US$36 a barrel and metal prices fell.
The Dow Jones Stoxx 600 Index retreated 0.9 percent this week to 196.43, bringing its decline this year to 46 percent as credit losses and writedowns at the world’s largest banks surpassed US$1 trillion and the US, Europe and Japan entered the first simultaneous recessions since World War II.
“The economic slowdown is reflected in the price of oil,” said Chicuong Dang, an analyst at KBL Richelieu Gestion in Paris, which has about US$5.6 billion under management. “It shows that the market context is very difficult. We have to expect further downgrades of ratings and profit warnings. There’s a lot of volatility to come.”
The Stoxx 600 dropped every day this week except on Tuesday.
The US Federal Reserve this week cut its benchmark interest rate to as low as zero for the first time and pledged to use “all available tools” to spur economic growth.
US president-elect Barack Obama may ask Congress to approve a stimulus plan of around $850 billion.
The European Central Bank also cut the rate it pays institutions to deposit money with it overnight in an effort to jolt banks into lending more to each other.
National benchmark indexes rose in 10 out of 18 western European markets. Germany’s DAX gained 0.7 percent. Britain’s FTSE 100 rose 0.2 percent and France’s CAC 40 added 0.4 percent.
The Dow Jones Europe Stoxx Banks Index fell 6.5 percent in the week, the sharpest retreat among 19 industry groups.
BNP, France’s largest bank, plunged 31 percent. The corporate and investment division had a 710 million euro (US$981 million) pretax loss in the first 11 months of the year and may cut about 800 jobs, or 5 percent of the unit’s staff.
Separately, a Belgian court froze the lender’s plans to buy Fortis assets and the bank said it has as much as 350 million euros at risk from investments with Madoff.
Fortis, the insurer that was once Belgium’s largest financial services company, rallied 22 percent in Brussels.
HSBC Holdings Plc slipped 16 percent. CLSA Asia-Pacific Markets said Europe’s largest bank may seek to raise about US$14 billion as increasing bad-loan provisions erode profits. HSBC also has US$1 billion at risk after providing financing to funds that invested with Madoff.
US President Donald Trump yesterday announced sweeping "reciprocal tariffs" on US trading partners, including a 32 percent tax on goods from Taiwan that is set to take effect on Wednesday. At a Rose Garden event, Trump declared a 10 percent baseline tax on imports from all countries, with the White House saying it would take effect on Saturday. Countries with larger trade surpluses with the US would face higher duties beginning on Wednesday, including Taiwan (32 percent), China (34 percent), Japan (24 percent), South Korea (25 percent), Vietnam (46 percent) and Thailand (36 percent). Canada and Mexico, the two largest US trading
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‘SPECIAL CHANNEL’: Taipei’s most important tasks are to stabilize industries affected by Trump’s trade tariffs and keep negotiations with Washington open, a source said National Security Council Secretary-General Joseph Wu (吳釗燮) arrived in the US for talks with US President Donald Trump’s administration, a source familiar with the matter said on Friday. Wu was leading a delegation for a meeting known as the “special channel,” the Financial Times reported earlier. It marked Trump’s first use of the channel since returning to the White House on Jan. 20. Citing a source familiar with the matter, the Financial Times reported that Minister of Foreign Affairs Lin Chia-lung (林佳龍) was also a part of the delegation. The visit came days after China concluded war games around Taiwan and amid Trump’s
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