Tax hikes pull London markets down

Sliding financial stocks pulled London markets down today after prime minister Boris Johnson announced a hike to dividend taxes and national insurance.

The capital’s premier index fell, the FTSE 100, slipped 0.48 per cent to 7,152.75 points, while the mid-cap FTSE 250 had 0.62 per cent shaved off its value to fall to 24,097.48 points.

Losses were led by broker TP Icap, which plummeted 10.69 per cent to 176p, while the likes of investment platforms AJ Bell and Hargreaves Lansdown fell 2.62 per cent and 0.97 per cent respectively.

Danni Hewson, financial analyst at AJ Bell, said: “There’s not much like the threat of tax hikes on dividends to send an icy chill up investors’ spines.”

“That surprise announcement, coupled with the scrapping of the pension triple lock and hints from Bank of England hawk Michael Saunders that rate rises, all be it limited, could well be on the cards next year and London markets failed to reverse much of the morning’s losses.”

The losses reversed a good day on London markets yesterday, primarily driven by last Friday’s weaker than expected US jobs report allaying fears the US Federal Reserve will tighten monetary policy soon.

AIM shares slid 0.50 per cent to 1,307.55 points heading into the closing stages of trading. The pound lost ground on the greenback, sliding 0.34 per cent to $1.3788.

Winners and losers

TP lcap led the day’s losses on London markets, trailed closely by AJ Bell and Hargreaves Lansdown.

On the capital’s premier index, housebuilder Berkeley topped the fallers column, sliding 2.96 per cent to 4,658p, despite data released by Halifax this morning showing UK house prices are still rising, up 0.7 per cent over the last month.

Middle class favourite Ocado slipped 2.58 per cent to 1,965p, while engineer Weir Group was down 2.46 per cent top 1,723p.

Packaging firm DS Smith topped the biggest risers column after it published a trading update this morning showing Europe’s ecommerce boom, triggered by the pandemic, has boosted box volumes.

Hospitality firm Whitbread came second, gaining 2.80 per cent to reach 3,260p. The mid-cap index was led higher by Marks and Spencer surging 3.34 per cent to 187.10p and bookmaker 888 Holdings, up 1.82 per cent to 414p.

Around the world

Asian shares surged in overnight trading, led higher by stronger than expected China exports in August and strengthening expectations that a new regime in Japan will unleash a wave of economic stimulus.

Japan’s Nikkei rose 0.86 per cent to 29,916.14 points, while China’s CSI 300 shot up 1.20 per cent to 4,992.83 points.

China’s exports jumped 25.6 per cent annually in August, higher than 17.1 per cent forecasted by analysts.

Jeffrey Halley, senior market analyst for the Asia Pacific at OANDA, said: “China’s August Balance of Payments data has alleviated some of the recent slowdown fears sweeping US and Asian markets after last week’s procession of soft data.”

Meanwhile, London’s poor performance rippled across the Atlantic, with Wall Street’s main benchmarks all down in the first session of trading.

The S&P 500 and Dow Jones slipped 0.31 per cent 0.66 per cent, while th tech-heavy Nasdaq added 0.09 per cent.

European shares capped off a poor day for global markets – the Dax 30 and Stoxx 600 both closed down 0.56 per cent and 0.45 per cent respectively.