Europe: Chip stocks drag shares lower after ASML's warning
The pan-European Stoxx 600 index closed 0.57 per cent lower at 541.84, marking its fourth straight day of losses. Most regional bourses also slipped, with German blue-chips off 0.2 per cent.
European equities fell sharply just before the close after Bloomberg reported that Trump is likely to fire Fed Chair Powell, but Trump said later he is not planning to do so.
'This is something where the market views stability as a good thing,' said Joe Saluzzi, partner and co-founder at Themis Trading.
'It's a volatile situation. I don't think the market is in the opinion that we need a new Fed chair.'
Dutch firm ASML was the biggest drag on the Stoxx, tumbling 11.4 per cent - its biggest drop in nine months - after warning it may not achieve growth in 2026, despite second-quarter bookings beating expectations.
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Other chip stocks including BE Semiconductor, ASMI and STMicroelectronics dropped between 2.1 per cent and 5.2 per cent.
European auto stocks fell 1.8 per cent, led by Renault, sliding 18.5 per cent after the French carmaker surprised investors with a profit warning.
Another earnings-driven decline was Fuchs, down 12.9 per cent after the German lubricant supplier cut its outlook for 2025 and posted weaker than expected second quarter results.
The latest earnings forecasts released on Tuesday showed a deteriorating outlook for European corporate health, as Trump's most recent tariff statements added to business uncertainty.
'Looking at the earnings season, it's expected that Europe is going to be hit the most,' said Anthi Tsouvali, multi-asset strategist at UBS Global Wealth Management, citing tariff-driven uncertainty, weak business sentiment and margin pressure from stockpiling.
EU's trade chief Maros Sefcovic headed to Washington for tariff talks, and is expected to meet US Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer, an EU spokesperson told Reuters.
On the higher side, shares in asset manager Partners Group rose 5.1 per cent to the top of the Stoxx after the firm reported better-than-expected half-yearly assets under management and confirmed its full-year outlook.
Spirits maker Diageo closed 0.6 per cent higher after jumping as much as 4.5 per centearlier in the day. CEO Debra Crew stepped down after two years in the job.
On the data front, Britain's annual rate of consumer price inflation unexpectedly rose to its highest in over a year at 3.6 per cent in June, up from 3.4 per cent in May. REUTERS
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Straits Times
23 minutes ago
- Straits Times
Malaysia's export-oriented businesses fret as deadline for US tariff deal draws near
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Washington had earlier said it would impose an unspecified additional levy on transshipment goods via Malaysia . It has not yet defined what percentage of Chinese inputs would classify goods as transshipment. The threat of US enforcement actions that target China-based supply chains will weigh down the competitiveness of Malaysia's exports as the country is a regional manufacturing hub and is deeply integrated with Chinese intermediate goods, said Mr Soh Thian Lai, president of the Federation of Malaysian Manufacturing. An intermediate good is a product (for example, steel) used in the production of a finished or final good (a stainless steel wok) . Although there are no available figures for intermediate goods imported from China, Malaysia recorded imports of intermediate goods totalling RM748.9 billion in 2024, representing a 74 per cent increase since 2020. Separately, Malaysia imported RM296.5 billion worth of goods from China in 2024 , a 72 per cent increase from 2020. 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In reality, there is no transshipment but significant value additions in Malaysia,' Mr Yap told ST. Malaysia ships a significant portion of its electrical and electronic sector products to the US. In 2024, such goods, including semiconductor and telecommunication equipment, made up 60 per cent of its exports to the US and were valued at RM119.86 billion. To address Washington's concerns regarding transshipments and increasing scrutiny over allegedly fraudulent origin claims of Malaysian products , the Ministry of Investment, Trade and Industry (Miti) in May revoked the authority of other organisations like local business councils, chambers or association , to issue non-preferential certificates of origin (NPCOs) for US-bound cargo. Industry sources whom ST spoke to in May , said there have been cases of Chinese manufacturers using Malaysia as a transshipment hub, allegedly going as far as to falsify certificates of origin in an effort to bypass US tariffs. 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Regionally, the US levied a tariff of 36 per cent against Thailand's exports , and 20 per cent against the Philippines, and 10 per cent on Singapore in a July 18 announcement. Vietnam secured a deal for a 20 per cent tariff rate and 40 per cent rate on goods deemed to be transshipped. Earlier in May, the US Department of Justice's (DoJ) criminal division issued a memo detailing the ' threats to the US economy' where it listed 'tariff evasion ' as a priority area it must tackle as part of combatting white-collar crime. Washington later in June reached a trade deal with China , which saw duties on Chinese goods cut to around 55 per cent – down sharply from a previous 145 per cent. AmBank Group Chief Economist Mr Firdaos Rosli said that comparing tariff rates between countries should not be the main focus for Malaysia , given the broader uncertainty posed by Mr Trump's trade policies. ' Although the US is a major global consumer market, the world is bigger ... Perhaps we should focus more on trading among ourselves rather than relying so heavily on a single nation,' he said. A former US DOJ prosecutor turned consultant Mr Artie McConnell said the lack of a common definition and the high burden of proof by prosecution to show that transshipping has occurred could hinder Mr Trump's efforts to criminalise the practice . 'When you have, say, a chemical mixture or a high-end electronic item, and there's no precedent under the (World Trade Organisation's) Harmonised Tariff Schedule (HTS), classifying the item can be very difficult,' Mr McConnell, now a partner at US lawfirm BakerHostetler told a forum on July 15. He advised firms to implement basic compliance programmes, such as having essential paperwork in order. With these processes in place, he said 'you've already completed 90 per cent of the work' to ready oneself for the new era of tariffs.
Straits Times
23 minutes ago
- Straits Times
EU's new Russia sanctions aim for more effective oil price cap
Find out what's new on ST website and app. FILE PHOTO: European Union High Representative for Foreign Affairs and Security Policy Kaja Kallas arrives at the 5th EU-Southern Neighbourhood Ministerial meeting in Brussels, Belgium, July 14, 2025. REUTERS/Yves Herman/File Photo BRUSSELS - The European Union on Friday agreed an 18th package of sanctions against Russia over its war in Ukraine, including measures aimed at dealing further blows to the Russian oil and energy industry. The EU will set a moving price cap on Russian crude at 15% below its average market price, EU diplomats said, aiming to improve on a largely ineffective $60 cap that the Group of Seven major economies have tried to impose since December 2022. "The EU just approved one of its strongest sanctions packages against Russia to date," EU foreign policy chief Kaja Kallas said on X. "We will keep raising the costs, so stopping the aggression becomes the only path forward for Moscow." G7 PRICE CAP INEFFECTIVE SO FAR Yet Russia has so far managed to sell most of its oil - the lifeblood of its state finances - above the previous price cap as the current mechanism makes it unclear who must police its implementation. Traders doubt the new EU sanctions will significantly disrupt Russian oil exports. Kremlin spokesman Dmitry Peskov shrugged off the EU move, which would, at current prices, aim to cap the price of Russian crude at roughly $47.60 per barrel. Benchmark Brent futures rose marginally on Friday to about $70. [O/R] "We have repeatedly said that we consider such unilateral restrictions illegal, we oppose them," Peskov told reporters. "But at the same time, of course, we have already acquired a certain immunity from sanctions, we have adapted to life under sanctions." The package also bans transactions related to Russia's Nord Stream gas pipelines under the Baltic Sea, and with Russia's financial sector. Kallas said 105 ships in Russia's "shadow fleet", the term used by Western officials for ships that Moscow uses to circumvent oil sanctions, had been blacklisted, along with Chinese banks that "enable sanctions evasion", which she did not name. Ukrainian President Volodymyr Zelenskiy called the decision "essential and timely" as Russia intensifies its air war on Ukrainian cities and villages. Foreign Minister Andrii Sybiha added: "Depriving Russia of its oil revenues is critical for putting an end to its aggression." US DECLINES TO BACK EUROPE ON PRICE CAP The European Union and Britain have been pushing to lower the G7 cap for the last two months after a fall in oil futures made the level of $60 a barrel largely irrelevant. [O/R] But the United States has resisted, leaving the EU to move forward on its own, but with only limited power to enforce the measure, analysts and oil traders say. As the dollar dominates global oil transactions, and U.S. financial institutions play the central role in clearing payments, the EU cannot block trades by denying access to dollar clearing. Agreement on the new EU package was held up for weeks as Slovakian Prime Minister Robert Fico demanded concessions on a separate plan to phase out EU dependence on Russian oil and gas. Fico announced on Thursday night that he was ending his opposition. Countries such as Greece, Cyprus and Malta had expressed concerns about the effect of the oil price cap on their shipping industries. But Malta, the last of the trio to hold out, also came on board on Thursday. REUTERS
CNA
23 minutes ago
- CNA
AI models with systemic risks given pointers on how to comply with EU AI rules
BRUSSELS :The European Commission set out guidelines on Friday to help AI models it has determined have systemic risks and face tougher obligations to mitigate potential threats comply with European Union artificial intelligence regulation (AI Act). The move aims to counter criticism from some companies about the AI Act and the regulatory burden while providing more clarity to businesses which face fines ranging from 7.5 million euros ($8.7 million) or 1.5 per cent of turnover to 35 million euros or 7 per cent of global turnover for violations. The AI Act, which became law last year, will apply on Aug. 2 for AI models with systemic risks and foundation models such as those made by Google, OpenAI, Meta Platforms, Anthropic and Mistral. Companies have until August 2 next year to comply with the legislation. The Commission defines AI models with systemic risk as those with very advanced computing capabilities that could have a significant impact on public health, safety, fundamental rights or society. The first group of models will have to carry out model evaluations, assess and mitigate risks, conduct adversarial testing, report serious incidents to the Commission and ensure adequate cybersecurity protection against theft and misuse. General-purpose AI (GPAI) or foundation models will be subject to transparency requirements such as drawing up technical documentation, adopt copyright policies and provide detailed summaries about the content used for algorithm training. "With today's guidelines, the Commission supports the smooth and effective application of the AI Act," EU tech chief Henna Virkkunen said in a statement.
