• February 26, 2024

Wall Street tax hangover weighs on European markets

European stocks struggled for traction on Friday, due to a weaker Wall Street closing price triggered by reports that affluent America was facing a hike in capital gains taxes.

The Stoxx Europe 600 Index
SXXP, -0.05%
was slightly lower at 439.60, after the third highest closing price in history and a plus of 0.7% on Thursday. On a weekly basis, the index is down 0.7%, which would mark the first weekly decline since late February.

The German DAX
DAX, -0.22%
The French CAC 40 index slipped 0.2%
UKX, -0.15%
rose 0.1% and the FTSE 100 index
UKX, -0.15%
decreased by 0.2%. The pound
GBPUSD, + 0.30%
rose 0.3% against the US dollar to $ 1.3882.

US stock futures
ES00, + 0.25%

NQ00, + 0.18%

YM00, + 0.20%
Inches higher and later indicated a rally in stocks. Session on Thursday left the Dow Jones Industrial Average with a loss of 321 points after a report on Bloomberg News that President Joe Biden would propose nearly doubling the capital gains tax rate for wealthy Americans. The S&P 500
SPX, -0.92%
and Nasdaq Composite
COMP, -0.94%
each lost 0.9%.

There were encouraging signs of new European economic data. The IHS Markit Eurozone Purchasing Managers Index (PMI) composite output index rose to a nine-month high of 53.7, with the PMI for manufacturing in the Flash Eurozone reaching a record high and the PMI for services reaching an eight-month high.

“In a month as virus containment measures tightened amid more waves of infection, the eurozone economy showed encouraging strength,” said Chris Williamson, chief economist at IHS Markit.

The automotive sector was the leader in European equity gains with shares in Daimler
DAI + 0.07%
plus 1.6%. The German luxury car manufacturer increased the margin targets for the Mercedes-Benz and Mobility divisions for the year after profit and sales increased in the first quarter.

Remy Cointreau
RCO, -0.35%
reported Sales increased slightly Adjusted for currency effects throughout the fiscal year as strong cognac sales increased sales in the fourth quarter. The shares of the French beverage group fell 0.4%. Shares in rival beverage maker Diageo
DGE, -0.87%
fell 1.6%.

The banking and pharmaceuticals sectors were under pressure with AstraZeneca shares
AZN, -0.75%

AZN, + 0.08%
decreased by over 1%. Large oil company stocks also weighed on the index, with BP stocks
BP, -2.48%

BP, -1.00%
and Royal Dutch Shell
RDS.A, -2.25%

RDSA, -0.54%
decreased by 1.8% and 0.6% respectively.

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