European stocks snapped two straight weeks of gains on speculation a rally that drove valuations on the Dow Jones STOXX 600 Index to the highest in six years has outpaced the prospects for economic and earnings growth.
A.P. Moeller-Maersk AS slumped 9.8 percent after the owner of the world’s largest container shipper held its biggest share sale since World War II to help finance acquisitions in the oil and terminals businesses. Eiffage SA led a slump among construction firms as reports on US unemployment and factory orders spurred concern that the economy is struggling to recover.
Europe’s STOXX 600 index slid 1.5 percent to 233.85 in the past week. The regional benchmark gauge has still soared 48 percent since March 9 as the French and German economies unexpectedly emerged from recession and profits at companies from Roche Holding AG to L’Oreal SA topped analysts’ estimates. The rally pushed the price-to-earnings ratio on the index to 44.8, near the highest level since September 2003, according to data compiled by Bloomberg.
Equity strategists at Goldman Sachs Group Inc and UBS AG raised their year-end forecasts for European equities, citing prospects for an economic recovery and a revival in earnings growth. Goldman Sachs lifted its estimate for the STOXX 600 index to 260 from 235, while UBS’s Nick Nelson increased his target for the FTSEurofirst 300 Index to 1,100 from 1,000.
“While we agree that the market tends to make its strongest returns while the economy is still contracting, albeit at a slowing rate, it tends to make further gains as the economy begins to expand,” a team of Goldman Sachs strategists led by Peter Oppenheimer in London wrote in a report dated Sept 3.
The US Federal Reserve expressed “considerable uncertainty” about the strength of the recovery in the world’s largest economy, minutes of its August meeting showed on Wednesday.
EU Monetary Affairs Commissioner Joaquin Almunia said he “cannot be optimistic” about unemployment in the region, which is at a 10-year high.
“The figures are worrying,” Almunia told reporters on Wednesday in Brussels after a meeting of European finance ministers. “I cannot be optimistic for the next months because we know from our experience that the negative reaction of the labor market to the economic contraction has a certain lag.”
The euro-area unemployment rate increased to 9.5 percent in July, the highest since June 1999, the EU statistics office in Luxembourg said on Monday. The European Commission forecasts the jobless rate will rise to 11.5 percent next year.
Taiwan moved clear of Mexico to be the only country at No. 2 in the World Baseball Softball Confederation (WBSC) Men’s Baseball World Rankings. Meanwhile, draft bills to set up a ministry of sports were approved at a joint session at the legislature in Taipei yesterday. After previously being tied with Mexico for second on 4,118 points, Taiwan moved clear on 5,498 points after they defeated Japan in the final of the WBSC Premier12 tournament on Sunday. Mexico (4,729) dropped to fourth, behind Venezuela (4,846), who finished fourth at the tournament. Taiwan narrowed the gap to first-placed Japan to 1,368 points from 1,638, WBSC
South Korean President Yoon Suk-yeol yesterday declared emergency martial law, accusing the opposition of being “anti-state forces intent on overthrowing the regime” amid parliamentary wrangling over a budget bill. “To safeguard a liberal South Korea from the threats posed by North Korea’s communist forces and to eliminate anti-state elements plundering people’s freedom and happiness, I hereby declare emergency martial law,” Yoon said in a live televised address to the nation. “With no regard for the livelihoods of the people, the opposition party has paralysed governance solely for the sake of impeachments, special investigations, and shielding their leader from justice,” he
GLOBAL SUPPORT: The Ministry of Foreign Affairs said that the motion highlighted the improper exclusion of Taiwan from international discussion and cooperative mechanisms Taiwan yesterday thanked the British parliament for passing a motion stating that UN Resolution 2758 does not involve Taiwan, making it the latest body to reject China’s interpretation of the resolution. The House of Commons on Thursday debated the international status of Taiwan and unanimously passed a pro-Taiwan motion stating that the House “notes that UN Resolution 2758 does not address the political status of Taiwan or establish PRC [People’s Republic of China] sovereignty over Taiwan and is silent both on the status of Taiwan in the UN and on Taiwanese participation in UN agencies.” British Foreign, Commonwealth and Development Office Parliamentary
HIGH ALERT: The armed forces are watching for a potential military drill by China in response to the president’s trip, with the air force yesterday conducting an exercise President William Lai (賴清德) is to make stopovers in Hawaii and the US territory of Guam during his seven-day trip to the South Pacific, his first official visit since taking office in May, the Presidential Office said yesterday. Lai, accompanied by a delegation, is scheduled to depart for the South Pacific on a chartered flight at 4:30pm tomorrow, stopping first in Hawaii for a two-night layover before traveling to the Marshall Islands, an office official said. After wrapping up his visits to the Marshall Islands and Tuvalu, the president is to transit through Guam, spending a night there before flying to Palau,
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