European stocks posted their worst session in more than year on Friday, as reports of a newly identified and possibly vaccine-resistant SARS-CoV-2 variant stoked fears of a fresh hit to global economy and drove investors out of riskier assets.
The benchmark STOXX 600 fell 3.7 percent. It had slid as much as 3.6 percent in early trading, while the volatility gauge for the main stock market hit its highest in nearly 10 months. For the week, it plunged 4.53 percent.
Little is known of the variant detected in South Africa, Botswana and Hong Kong, but scientists said it has an unusual combination of mutations and might evade immune responses or make it more transmissible.
France’s CAC 40 shed 4.75 percent, leading regional markets lower as shares in plane maker Airbus SE, shopping center operator Unibail SE and Safran SA fell 10 to 11 percent each.
UK’s FTSE 100 dropped 3.64 percent, while Germany’s DAX fell 4.15 percent and Spain’s IBEX lost 4.96 percent.
Cyclical-heavy European stock markets have already been under stress this week as a resurgence in COVID-19 cases prompted new restrictions in several countries.
“While COVID still has an impact on market sentiment, it is not the dominant driver it was a year ago. Political and economic agendas have more breadth,” Hargreaves Lansdown head of investment analysis Emma Wall said. “That said, should we have a difficult winter with returned restrictions expect to see those stock sectors which were most vulnerable before wobble — retail, leisure, entertainment and travel.”
Travel and leisure stocks were down 3.9 percent after falling as much as 7 percent after the UK announced a temporary ban on flights from South Africa and several neighboring countries from Friday. The EU is also planning similar moves.
Shares in British Airways owner IAG and EasyJet Holdings PLC, cruise operator Carnival Corp PLC and travel company TUI Group fell 9 to 10 percent.
Oil and gas producers dropped 4.3 percent, while miners tumbled 3.5 percent as oil and metal prices lost ground as reports of the new virus variant fueled economic slowdown worries.
Tracking falls in bond yields, the banking index dropped 4.4 percent, while some stay-at-home stocks, including Delivery Hero SE and Just Eat Takeaway.com NV rose about 3 percent.
The virus scare prompted eurozone money markets to scale back bets of a rate hike from the European Central Bank next year. Odds of a 10 basis point rate hike in December next year almost halved from a full 100 percent earlier this week.
DISMAL OUTLOOK: A Citigroup analyst predicted firms face ‘the worst semiconductor downturn in at least a decade,’ due to inventory build and the potential of a recession Semiconductor stocks tumbled after Micron Technology Inc became the latest chipmaker to warn about slowing demand, triggering concern that the industry is heading into a painful downturn. In the US on Tuesday, the Philadelphia semiconductor index sank 4.6 percent, with all 30 members in the red, its biggest drop in about two months. In Asia, chip stocks from Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to Samsung Electronics Co, SK Hynix Inc and Tokyo Electron Ltd slumped. Investors are growing increasingly skittish as the notoriously cyclical industry is hurtling toward a prolonged slump after years of widespread shortages that led to heavy
With a tantalizing array of satay chicken, wok-fried mud crab and chilled tiger prawns, the dinner buffet at Singapore’s Grand Hyatt hotel typically sets diners back about US$70. Those on a tighter budget and with an eye on sustainability can fill a box for one-tenth of that price. Across Asia, tech start-ups are taking food otherwise destined for landfill and providing discounted meals through mobile phone apps. About one-third of food is lost or wasted every year globally, and the mountains of waste are estimated to cause 8 to 10 percent of greenhouse gas emissions such as methane, the UN says.
MAJOR REVENUE CONTRIBUTOR: The company said that it expects revenue this year to increase annually due to an improved smart consumer electronics outlook Hon Hai Precision Industry Co (鴻海精密) yesterday said revenue this quarter would be flat from last quarter, despite new phone models launched by key customers, as the market faces weakening demand. The iPhone assembler, based in New Taipei City’s Tucheng District (土城), said it is cautious about its business outlook, given mounting uncertainty regarding geopolitical tensions, soaring inflation and COVID-19 flare-ups, but still expects revenue this quarter to be higher than the NT$1.4 trillion (US$46.67 billion) it reported a year earlier. The forecast came as the company posted record second-quarter net profit of NT$33.29 billion, up 12 percent year-on-year from NT$29.78 billion.
Yageo Corp (國巨) yesterday said that its revenue would drop by a low single-digit percentage this quarter from a historical high last quarter, as customers and distributors are holding back demand to concentrate on inventory digestion due to flagging smartphone and notebook computer demand. The world’s biggest supplier of passive components expects to take three to six months to reduce its inventory of commoditized passive components to a normal level of 100 to 110 days, from 130 days currently. Yageo would reduce its factory utilization rate for standard passive components to about 60 percent this quarter, from about 70 percent last quarter,