While you were sleeping: EU ruling sours Apple

Wednesday 31st August 2016

A decline in Apple shares after the European Union demanded the company pay a record amount in what it ruled to be back taxes weighed on Wall Street.

Shares of Apple slid, down 0.9 percent as of 3.08pm in New York, after the European Commission ruled that Ireland granted the company undue tax benefits of up to 13 billion euros (US$14.5 billion)—"illegal aid” under EU rules that the commission says Ireland now must recover from Apple.

However, the move drew criticism from the US Treasury Department and lawmakers.

"The European Commission's decision is a predatory and naked tax grab," US Representative Kevin Brady, chairman of the House Ways and Means Committee, said in a statement, Reuters reported.

In 2.52pm trading in New York, the Dow Jones Industrial Average slid 0.39 percent, while the Nasdaq Composite Index declined 0.38 percent. In 2.37pm trading, the Standard & Poor’s 500 Index retreated 0.40 percent.

Slides shares of Boeing and those of Nike, down 1.5 percent and 1.1 percent respectively, led the Dow lower. Financial stocks bucked the trend, with shares of JPMorgan Chase up 0.7 percent and those of Goldman Sachs trading 0.6 percent stronger recently.

In the latest US economic data, a Conference Board report showed its consumer confidence index rose 4.4 points to 101.1 in August, the highest reading since September 2015.

"This will likely be interpreted as more evidence that the U.S. economic recovery is back on track following the missteps earlier this year," Millan Mulraine, deputy chief economist at TD Securities in New York, told Reuters.

Potential deal news bolstered the mood. Shares of Canada's Potash Corporation of Saskatchewan and Agrium jumped after the fertiliser producers said they are in talks about a potential merger of equals.

"No decision has been made as to whether to proceed with such a combination, no agreement has been reached, and there can be no assurance that any transaction will result from these discussions," the companies said in their separate releases, without offering further details.

Even so, people familiar with the matter said a combination could be announced as soon as next week, according to Bloomberg, which first reported that the rivals were in talks about a merger.

Agrium shares jumped, trading 6.4 percent higher as of 1.49pm in Toronto, while those of Potash Corp also rallied, trading 12.4 percent stronger.

In Europe, the Stoxx 600 Index finished the session with a 0.5 percent advance from the previous close. France’s CAC 40 index rose 0.8 percent and Germany’s DAX index climbed 1.1 percent. The UK’s FTSE 100 Index slid 0.3 percent.

BusinessDesk.co.nz

Comments from our readers

No comments yet