HomeTop Global NewsBank Stocks Slide Following New Italian Tax and Weak Chinese Economic Data

Bank Stocks Slide Following New Italian Tax and Weak Chinese Economic Data

U.S. bank stocks slipped lower on Tuesday morning as markets digested Italy’s decision to implement a new tax on banks as well as weak economic data coming out of China.

Italy’s government decided to introduce a 40% tax on “extra” bank profits, igniting fears that other financially stretched European governments could decide to implement similar measures as a means of recovering cash.

UniCredit SpA and Intesa Sanpaolo SpA both slumped by more than 5% following the announcement, thereby bringing the Stoxx Europe 600 index down by 0.3% at 9:50 a.m. London time. Futures on the S&P 500 index were down 0.3% while those on the Sow Jones Industrial Average and the Nasdaq 100 fell 0.2% and 0.4% respectively.

“This news is a strong headwind for the banking sector which is an important component of European indexes.” Rajeev De Mello, a global macro portfolio manager at Gama Asset Management SA said of the new Italian tax.” Such actions increase the risk that other cash-strapped European governments seek similar or other ways to raise fiscal revenues from their banks.”

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