Tuesday 21 August 2018

Muted response to US tax breakthrough

Traders work on the floor of the New York Stock Exchange (NYSE)
Traders work on the floor of the New York Stock Exchange (NYSE)

Reuters

Financials led European stocks higher on Thursday in a reversal of earlier losses after a muted response to the approval by the US Congress of a long-anticipated tax overhaul, while a vote in Catalonia in Spain remained in focus.

The pan-European STOXX 600 index ended the session with a 0.6pc gain, with Britain's FTSE hitting a record, up 1.1pc. Trading volumes were thin, however.

Gains were broad-based, with almost every European sector in positive territory. Health stocks, consumer staples and financials added the most points, while energy and materials also helped.

David Madden, market analyst at CMC Markets UK, put the rise down to investors winding down their positions ahead of the Christmas holiday with volatility remaining low.

Spain's IBEX was up 1pc, shrugging off any jitters over a regional Catalan election in that country.

The Spanish government hoped Thursday's election would strip pro-independence parties of their control of the Catalan parliament.

Shares in Spanish banks Caixabank, Sabadell and Santander all gained between 1.5pc to 2.1pc.

"While our base case remains that a negotiated settlement will be reached over the Catalan political situation, the risk we see is that it could take months rather than weeks to deliver such agreement, disappointing market expectations," analysts at Jefferies said in a note.

Elsewhere the US $1.5 trillion tax bill, which has been a focus for equity markets this year, saw its final approval largely shrugged off by European equities.

Investors were hopeful the tax plan, which slashes corporate income tax rates to 21pc from 35pc, will provide an economic uplift.

Irish Independent

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