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Markets Shocked on Friday, AstraZeneca’s Share Price Falls & UK’s Planned Tax Hike

Markets move as Non-Farm payrolls miss expectations

Markets were shocked on Friday, as non-farm payrolls dropped well below expectations, leading to the U.S. labor sector continuing to slow.

Figures released today showed that payrolls rose by 235,000 jobs in August, which is the smallest gain since January this year.

Non-farm payroll’s impact in the forex market
As with many other economic indicators, the difference between the actual non-farm data and the figures expected by economists will often determine the overall market impact. If there are any major surprises or disappointments, which deviate from expectations, the forex market will likely react to the new reality by adjusting prices and exchange rates.

Markets had initially forecasted that payrolls would rise by 750,000 last month, whilst figures for July were revised up to show that 1.053 million jobs were created in July.

The S&P 500 fell from yesterday’s record high on the news, with Gold rallying to its highest level since July 29th.

GBPUSD also climbed to an intraday high of 1.3876, a level it hasn’t hit since August 16th.

AstraZeneca share price lower after EU settlement

Shares in AstraZeneca fell on Friday, as it was reported that the drugmaker had agreed to a settlement with the European Commission.

AstraZeneca, which was one of the first producers of the COVID-19 vaccine, came to an agreement with the commission, after delays in delivery earlier this year.

AstraZeneca’s legal disputes with the EU
Back in June The European Commission had taken AstraZeneca to court in a bid to force the drug giant to deliver 90 million more doses of its coronavirus vaccine before July.

The agreement will see the company commit to deliver around 60 million doses of its vaccine by the end of Q3.

In addition to this, 75 million doses will also be delivered by the end of the fourth quarter.

Despite this, AstraZeneca shares fell by 1.22% in today’s trading session, with the FTSE 100 also declining.

FTSE 100 falls on UK planned tax hike

The FTSE 100 finished this week’s trading session lower, as it was reported that the UK government was planning to raise its tax rates.

Reports surfaced that the government was considering a tax hike for close to 25 million Brits, in order to help fund the National Health Service.

Do tax hikes always affect the stock market?
A study by Fidelity looked at tax increases across corporate, personal, and capital gains, and their impact on the stock market as measured by the S&P 500 index since 1950.  In the 13 instances of tax increases since 1950, the S&P 500 index had higher average returns despite the increase.

The NHS, which was already a huge pre-pandemic talking point, became even more vital to Britain during the health crisis, with the government now moving to help strengthen the service.

Despite stating in 2019 that his government would not hike taxes, reports now suggest that Boris Johnson may look to hike National Insurance contributions by between 1-2 percentage points.

London’s FTSE 100 closed 0.36% lower on the rumors.

Quote of the day – “It’s not whether you’re right or wrong that’s important, it’s how much money you make when you’re right and how much you lose when you’re wrong.”

– George Soros

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