European stock indices are rising on Tuesday due to investors’ optimism about corporate profits, as well as the continued positive market sentiment after the UK’s fiscal policy reversal announced the day before.
The composite index of the largest enterprises in Europe Stoxx Europe 600 as of 12:50 CST rose by 0.23% to 399.4 points. Growth marks the fourth session in a row.
German DAX adds 0.84%, French CAC 40 – 0.32%, British FTSE 100 – 0.52%, Italian FTSE MIB – 1.22%, Spanish IBEX 35 – 0.55%.
Britain’s new Chancellor of the Exchequer, Jeremy Hunt, announced on Monday that he was phasing out much of the fiscal stimulus proposed by former British Treasury Secretary Quasi Kwarteng on 23 September.
In particular, the British government will return to plans to increase the corporate tax rate from 19% to 25% from April 2023, and will also refuse to reduce the tax on dividends, carry out wage reform, freeze alcohol duties and introduce a zero VAT rate. for foreign buyers.
In addition, the lowering of the base income tax rate to 19% from 20%, planned for April, will be postponed, and the program to subsidize homeowners’ electricity costs will be reduced.
Hunt’s proposals are expected to save the British authorities £32bn.
The Bank of England called “incorrect” the report of the Financial Times newspaper that the Central Bank will postpone the sale of government bonds from its portfolio until the market stabilizes.
Statistical data from Germany, published on Tuesday, showed some improvement in the mood of investors and analysts. The index of economic expectations for the next six months in October rose to minus 59.2 points from minus 61.9 points a month earlier. Experts polled by Trading Economics, on average, expected it to fall to minus 65.7 points.
Share quotes of European automakers are rising during trading on data from the European Automobile Manufacturers Association (ACEA), which showed an increase in car sales in the European Union in September by 9.6% compared to the same month in 2021. The increase in sales in the EU was noted in the second month, before that the figure had been declining for thirteen months in a row.
Shares of Volkswagen added 2.1%, Mercedes-Benz – 3.2%, Stellantis – 2.3%, BMW – 1.5%, Renault – 2%.
The value of shares of the French Publicis Groupe SA, one of the world’s largest advertising holdings, increased by 2.2%. Publicis has improved its 2022 organic revenue growth forecast to 8.5% from previously expected 6-7%, noting that it is yet to feel the impact of its customers’ spending cuts.
Swiss Re’s share price edged up 0.8% in trading. The Swiss reinsurer has a preliminary estimate of $1.3 billion in claims related to Hurricane Ian, and is therefore likely to post a net loss of $500 million in the third quarter.
Swiss pharmaceutical company Roche Holding AG shed 1.4%. Roche’s third-quarter revenue fell 8%, but the company reiterated its full-year guidance.
Rio Tinto, which lowered its full-year forecast for refined copper production, is down 1.2%. The company also said that iron ore shipments this year will be closer to the lower end of its forecast.
