Proactive Investors -
- FTSE 100 down 13 points at 7,541
- Abrdn PLC (LON:ABDN) falls after assets under management drop
- Italian banks rattled by 40% windfall tax
Italian banks rocked by windfall tax
Over in Europe now and shares in Italian banks have been rattled after the Italian government backed a 40% windfall tax on lenders’ profits for the remainder of 2023.
Italian deputy Prime Minister Matteo Salvini told a press conference on Monday that the 40% levy on banks’ extra profits, amounting to several billion euros, will be used to cut taxes and offer financial support to mortgage holders.
The FTSE MIB in Rome fell 1.4% to 28,152.19 with banks nursing heavy losses.
BPER Banca shares plunged 11%, Banco BPM (LON:0RLA) shed 7.8%, Intesa Sanpaolo (BIT:ISP) was down 7.2%, UniCredit (LON:0RLS) dropped 5.4%, Banca Monte dei Paschi di Siena SpA declined 6.4% and Finecobank was down 7.4%.
Under the one-off levy, Italy will tax 40% of banks’ net interest margin, a measure of income banks derive from the gap between lending and deposit rates.
In London, banks were broadly lower with Lloyds Banking Group PLC (LON:LLOY) down 0.5%, Barclays PLC (LON:BARC) off 0.6% and HSBC Holdings PLC (LON:HSBA) off 0.3%.
Glencore slides as net income more than halves
The FTSE 100 remains the wrong side of the line although losses are modest, down 13 points at 7,541.
Heading the risers is Beazley PLC (LON:BEZG), up 2.3% at 514.50p, after Barclays reiterated an overweight rating and 700p price target.
But Abrdn PLC continues to fall, now down 6.3%, after its half-year results showed a hefty outflow of funds leading to a drop in assets under management.
Glencore PLC (LON:GLEN) was down 2.6% after it reported interim profit tumbled due to underperforming Marketing and Industrial businesses, although the miner declared a special dividend and announced another share buyback.
Net income plunged by 62% to $4.57 billion from $12.09 billion a year earlier while Ebitda of $9.39 billion was down from $18.92 billion previously.
WPP PLC (LON:WPP) continued to slip in the wake of last week’s profit warning, down a further 1.4% to 799.20p.
Deutsche Bank (ETR:DBKGn) took the advertising agency off its buy list, downgrading to hold from buy.
Over in the FTSE 250, TI Fluid Systems leapt 16% after boosting its dividend as profit jumped, boosted by light vehicle production volume growth.
Pre-tax profit more than trebled to €58.9 million from €19.8 million a year prior while revenue advanced 13% to €1.77 billion from €1.56 billion.
The dividend was more than doubled to 2.30 euro cents per share from 1.00 cents a year prior.
FTSE 100 lower as Chinese economy splutters
The FTSE 100 slid in early exchanges after weak trade figures in China raised fears over the strength of the world’s second largest economy, while in the UK wet weather kept shoppers off the high street.
At 8.15am, London’s blue-chip index was down 18.76 points, 0.3%, at 7,535.73 while the FTSE 250 was little changed at 18,854.96.
Exports in China declined by 14.5% year on year in dollar terms, the steepest fall since the outset of the coronavirus pandemic in February 2020, while imports tumbled 12.4%.
Michael Hewson at CMC Markets said: “With numbers this poor it surely can’t be too long before Chinese policymakers take further steps to support their economy with further easing measures, however, there appears to be some reluctance to do so at any scale for the moment, due to concerns over capital outflows.”
Mining firms fell back on the news on concerns of lower demand for resources. Anglo American PLC (LON:AAL) dropped 1.5% and Antofagasta (LON:ANTO) fell 0.9%.
Back in the UK and growth in retail sales eased in July hit by the wet weather.
According to the latest British Retail Consortium and KPMG sales monitor, sales rose 1.5% on-year last month, below the three-month average growth of 3.5%, and less than the 2.3% growth reported a year earlier.
Paul Martin, UK head of retail at KPMG, said: "As the storm clouds came out, shoppers retreated, with like for like sales growth a dismal 1.5% up in July."
"Furniture and food & drink were the best sellers, whilst the wet weather meant no need to restock summer wardrobes.”
Samuel Tombs at Pantheon Macroeconomics said the "heavy rainfall appears to have weighed on retail sales in July.”
But he expects the pull back in spending in July to be just a “blip, given the outlook for a recovery in households’ real disposable income in the second half of this year.”
Abrdn PLC slipped 4.4% after what John Moore, senior investment manager at RBC Brewin Dolphin, called a “real mixed bag,” of results.
Revenue and profit rose, and the share buy-back programme was doubled but assets under management fell 1% due to net outflows.
The owner of Holiday Inn, Intercontinental Hotels Group PLC (LON:IHG) fared better with shares up 1.0% after its numbers.
Broker Peel Hunt said IHG has clearly recovered from the pandemic.
“Positives include the benefits of the extensive technology upgrades, which started before - and were completed during - the pandemic.”
“However, IHG’s share price has performed well into this set of results, and we do not see today’s message of steady progress from the new CEO as a driver of upside,” it added.