Italy's sudden imposition of windfall taxes on banks scared off global stock markets
The Hang Seng Index opened lower on Tuesday and initially fell to the level of 19,500 before rebounding. It rose to 19,370.8 points at 11:16 but then softened. Mainland China released its July trade data at 11 o'clock. In dollar terms, the country's imports and exports in July amounted to $482.92 billion, a decrease of 13.6%. Exports declined by 14.5%, falling short of market expectations of a 13.2% drop. Imports decreased by 12.4%, also lower than the market's anticipated 5.6% decline. The trade surplus was $80.6 billion, narrowing by 19.4%. Following the release of the data, the Hang Seng Index weakened slightly. It stabilized after falling to 19,112.61 points in the afternoon. The index had a daily trading range of 258.19 points with a turnover of HKD 104.62 billion. The Hang Seng Index, the H-share index, and the Hang Seng China Enterprises Index fell by 1.81%, 2.18%, and 2.78% respectively.
According to foreign reports citing China Evergrande Group (2007), the company has failed to make timely interest payments and its available funds have continued to decrease, leading to temporary liquidity pressure. The company is currently actively optimizing its fund arrangement to safeguard the legitimate rights and interests of creditors. Evergrande's stock price fell by 14.394%, marking the largest decline among blue-chip stocks. Its affiliated company, Evergrande Services (6098), also dropped by 9.677%.
The Hang Seng Index closed with a bearish candlestick, breaking below the 200-day moving average, 20-day moving average, and 50-day moving average. The MACD histogram widened, indicating a bearish signal. There were 471 advancing stocks and 1,174 declining stocks throughout the day, reflecting overall market weakness.
The Italian government has approved a 40% windfall tax on bank net interest income, applicable only for this year. According to sources cited by foreign media, the local government expects to generate nearly 3 billion euros in revenue. The government states that the collected taxes will be used to assist mortgage borrowers and implement tax reduction measures. This news has dampened the Italian stock market, with the MIB index falling by almost 2.1% and dragging down other markets' performance.
Moody's has downgraded the credit ratings of 10 small and mid-sized US banks, and placed larger banks like Bank of New York Mellon, US Bancorp, and State Street Bank on a downgrade watchlist. Moody's indicates that the US banking industry remains strong but faces multiple pressures, while also warning of risks associated with commercial real estate. The three major US stock indices have declined.
The overnight futures and American depositary receipts (ADRs) dropped, indicating a weak trend for the Hang Seng Index (HSI), with support at around 19100/18900 levels.
Mainland China will release the consumer price index (CPI) and proton pump inhibitor data for July at 9:30, with an expected decline of -0.4% for the former and -4.1% for the latter. The data is expected to provide insights into mainland China's deflation/inflation situation and add uncertainty to the market conditions.
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