European Markets Fall After Italy imposed Windfall Tax On Banks

Bridgette Randall
08 Aug, 2023
Frankfurt

European markets turned lower following worries of global economic growth and windfall tax on banks in Italy. 

Market indexes in Frankfurt, Paris, London and Milan declined after Italy imposed windfall tax on excess earnings this year and finance tax cuts and financial support for first time home buyers. 

The decision surprised markets and banks in the region dropped as much as 3% in Germany, France and Spain. 

In other economic news, China reported exports declined for the third month in a row and trade surplus also fell after imports also fell in July. 

Exports declined 14.5% to $281.7 billion and imports fell 12.4% to $201.1 billion resulting in a trade surplus of $80.6 billion from $102.7 billion a year ago. 

Politically sensitive exports to the U.S. fell 23.1%, ASEAN countries 21.4% and to the EU declined 20.6%. 

Exports of rare earth materials, critical for electric batteries. in July soared 49% from a year earlier to 5,426 metric tons, supported by strong international demand for battery powered vehicles and wind power systems. 

The sharp fall in imports was noticed by commodities market and copper and other base metal prices came under pressure and weak exports also highlighted the slowing global demand for Chinese products and reorienting of global supply chains away from China. 

 

Europe Indexes & Yields

The DAX index decreased 0.9% to 15,813.56, the CAC-40 index fell 0.8% to 7,263.27 and the FTSE 100 index dropped 0.6% to 7,507.44.  

The yield on 10-year German bonds decreased to 2.43%, 8rench bonds traded lower to 3.00%, the UK gilts edged up to 4.35% and Italian bonds decreased to 4.14%.

The euro edged lower to $1.095, the British pound to $1.271 and the U.S. dollar fetched 87.67 Swiss cents.

Brent crude decreased $1.20 to $84.20 a barrel and the Dutch TTF natural gas increased €0.44 to €30.05 per MWh.

 

Europe Stock Movers

Italian banks dropped after Italy placed 40% windfall tax on banks to finance tax cuts and financial support to first time mortgage holders. 

UniCredit SpA declined 6.9% to €21.06 and Intesa Sanpaolo SpA dropped 8.5% to €2.34. 

Banks in the region declined following the windfall tax announcement. 

Commerzbank, Dresdner Bank, Banco Santander and BNP Paribas dropped between 2% and 3%. 

Bayer AG declined 1.9% to €51.40 after the German chemical company reported a net loss of €1.9 billion in the second quarter. 

Mining companies traded down after Glencore reported profit nearly halved from a year ago and China's exports and imports declined in July. 

Glencore dropped 4.2% to 437.80 pence after the company reported half-year profit plunged 50% from a year ago. 

Anglo American and Antofagasta declined between 1.5% and 2.0%. 

Abrdn Plc dropped 8.4% to 200.20 pence after the asset management company reported a decline in its assets under management.