General, Market Event

Weekly Review: Germany on the ropes and Amazon’s $0 tax bill

Ben Weiss, Monday, 18 February 2019

Income tax

Germany’s economy was left fighting after only narrowly avoiding a recession that would have been seen implications felt across the world. Also, the US-China trade war that has stunted world economic growth has no end in sight, despite talks that were supposedly positive this week. Elsewhere, Amazon’s tax bill has been released, and it showed the firm paid absolutely no tax for the second successive year.

 

Germany recession near-miss

Germany was close to slumping into a recession, as it recorded growth of just 0.02% in the final quarter of 2018. This was off the back of negative growth in the previous quarter.

The economic slowdown has been attributed to a weaker performing car sector. Emission legislation implemented by the German government recently limited the amount of nitrogen oxide a car can exhume, something that many vehicles don’t currently abide by. This has meant consumers have been hesitant in buying new models, for fear of not complying with these laws.

A second main cause is said to be the US-Sino trade war. The two global heavyweights involved, such to their influence and economic power across the world, have impacted upon many economies. Germany, being the largest in Europe, seems to have felt the full brunt of the conflict.

Looking at it in terms of trading, the DAX reacted heavily to these latest growth figures. After an initial decline, it recovered to end stronger than before the news came out about growth. Traders perhaps still appreciated the strength of the top German companies and wanted to take advantage of the DAX’s lower price.

Join the action and trade indices such as the DAX here.

 

US-China trade war: Progress or no progress?

We have a situation between two powerful parties, both of whom want to come to an agreement on a deal that will secure future relations, but both are stubborn and seemingly unwilling to budge that last little bit to get a deal pushed over the edge – where have we heard that one before? The US-China trade war’s comparisons to Brexit are rather similar, and implications if some arrangement isn’t sorted soon could be equally as damaging on global trade.

But US representatives recently met in China to try to find some neutral ground. Nothing was agreed this week, but sides are ‘hopeful’ that it will be in the future. A truce has been in place since December, by which both sides have agreed to not introduce any new tariffs, but this end on 1 March. On this date, the US has promised to increase tariffs from 10% to 25% on Chinese imports if no deal is stuck.

Although talks seemed to have been positive, there are still some ‘very difficult issues’ that still seek resolution. China officials will now visit the US this week in hope of cementing real progress. Despite urgency being paramount, Trump has hinted at an extension to the March deadline if talks are going well.

It’s in the interest of world economies, not just the US and China, for a deal to be sought out. Slowdowns have been felt across the globe as a result of the two largest economies clashing, but has there been any actual progress this week, with no deal agreed as the all-important deadline looms?

 

Amazon’s $0 tax bill

Amazon has angered many people after it recently came out that for a second consecutive year, the e-commerce giant paid nothing in corporation tax. Although not illegal, the loopholes used to avoid paying any tax is frowned upon and has brought a lot of bad press to the company.

Amazon’s price fell sharply towards the end of last week, with a backlash from those angry at how a company that recorded profits of over $11 billion can pay nothing in tax. News of the abolition of plans for a new, New York HQ also came out recently after the proposal faced much opposition from senior figures and officials. Both of which may have been catalysts in sending Amazon down in the red. 

Amazon 18.02

Source: ETX TraderPro

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