The European stock market markets dropped on Friday as the attention went to the inflation impressions of the EU and the United States, along with investors’ concerns about the potential of a tax raid in the United Kingdom in the banks.
Paneuropeo Stoxx 600 It was 0.25% lower at 2 pm in London (9 am et), reducing the previous losses.
The inflation of the French consumer price cooled to 0.8% in August from 0.9% in July, said the INSEE statistics agency, just below expectations in a Reuters survey. It left the back of the decrease in energy and prices of manufactured products, while inflation in food and services reached 1.6% and 2.1%, respectively.
Meanwhile, German inflation increased to 2.1% in August from 1.8% in July. Economists surveyed by Reuters had predicted an annual rate of 2%.
In the United States, the Personal Consumer Expenses Index, a key metric for the Federal Reserve, entered in line with an annual 2.6% consensus. The nucleus inflation reached 2.9%, also as expected.
The impression will be closely monitored after the president of the FED, Jerome Powell, fueled the expectations of an interest rate cut in September with a speech last week, widely performed as folded. Interest rates trade was the last time it was applied around an 87% probability in a cut next month, according to the CME Fedwatch tool.
A general view at the Royal Victoria dock with JPMorgan, Citi, HSBC and Barclays Bank Skyscrapers in Canary Wharf and the IFS Cloud cable car on March 11, 2025 in London, the United Kingdom.
John Keeble | Getty Images News | Getty images
Retirement of Banks from the United Kingdom
Defense companies were the best winners at Stoxx 600 on Friday, with German players Hensoldt and Renk rises around 3%, and Rheinmetall 4.4% higher. That occurred after German Chancellor Friedrich Merz told journalists on Thursday that he doubted that a meeting between Russian President Vladimir Putin and his Ukrainian counterpart Volodymyr Zelenskyy are completed.
At the other end of the index there were British lenders Natwestless than 5.4%, Lloydsbelow 4.5%, and Barclaysminus 3.8%.
The Public Policy Research Institute published a report on Friday that suggests that the Government imposes a tax on commercial banks after the recent “unexpected profits” related to higher interest rates and the purchase of bonds by the Bank of England.
Going to the banks could show that the United Kingdom finance minister, Rachel Reeves, seeks to strengthen public finances in her next autumn budget.
Russ Mold, Investment Director of AJ Bell, said the merchants were considering whether the “era of profits, dividends and bumper repurchases is now under threat.”
“The moment of the fiscal debate, promoted by an IPPR report of the group of experts, is unfortunate since it coincides with a new Lloyds survey, which suggests an increase in business confidence, despite the cost pressures. This positive feeling could be threatened if companies take the opinion that a new tax on banks could force the lenders to press their loan criteria. Electronic Correos Comments.
However, he added that Reeves can “distrust of doing something that could discourage investors and shareholders, since she seeks to win the favor of the markets and attract investments”, and from any measure that can cushion loans and restrict economic growth.
Meanwhile, Citi analysts told customers that the IPPR proposal added little to a debate on bank tax increases that have been operating for several years. The Labor Government remains divided on how to proceed, and Reeves seems to favor encouraging banks to lend more through reforms to boost growth, according to Citi.
The options ahead could include changes in current bank taxes or a new tax aimed at the reserve statements of the banks, analysts said, but the latter would be difficult to implement and could lead lenders to instruments of greater risk. “You cannot rule out an increase in the banking tax of the United Kingdom, but we hope that other fiscal levers continue in advance,” they concluded.
Natwest’s shares price.
August profits
