European shares decline on US tax worries, disappointing retail updates

on Dec 15, 2017

European shares were trading lower, shortly after midday Friday, as investor sentiment weakened on concerns the US tax reform Bill might not pass before Christmas. Weaker than expected trading updates from a brace of retailers, also weighed.

By 1250 BST, the EUROSTOXX 600 was 0.39% lower, while the EUROSTOXX 50 was down 0.20%. The regional bourses were also trading with a negative bias. The German DAX slipped 0.20%, the French CAC was 0.37% in the red, while the Spanish IBEX was down 0.31%.

US tax reform worries

Investor sentiment wobbled overnight in Asia and in the European session so far, as the US tax reform process may not result in an agreed Bill, this side of Christmas.

While the Senate and House are now working together to create a single new Tax Bill that will satisfy both groups, some Senate members suggested Thursday they would not vote for the Bill in its current form.

A particular sticking point appears to be for Florida’s Republican Senator Marco Rubio. He’s reported as saying he will vote against the Bill unless more is done to expand child tax credits. The original Bill was only approved by a 51-49 Senate vote, which included Rubio’s support.

Retail updates weigh

Meanwhile, retailer updates from H&M and Ferragamo, disappointed investors.

H&M shares slumped 13.18% to SEK173.90, on news the fashion retailer’s fourth quarter earnings fell unexpectedly, on a lower than anticipated customer footfall.

Italian luxury goods retailer, Ferragamo shares fell 6.9% to €21.01, after the business said it still couldn’t confirm targets for the next three years, as the company continues to go through a period of transition.

Elsewhere, bank stocks were out of favour after the UK’s BOE and Europe’s ECB both kept interest rates and policy on hold, Thursday.

  • HSBC shares were 0.5% lower at £752.90.
  • Banco Santander shares recovered a little to trade down just 0.04% at €5.61.
  • BNP Paribas shares fell 1.2% to €62.73.