NEW YORK: An index for stocks around the world fell on Thursday, weighed in by Wall Street after reports the Biden administration will propose a sharp increase in capital gains tax, while the dollar index rose while the euro and the pound have given up their recent gains.
Oil prices have risen as concerns over Libyan production more than offset concerns that rising coronavirus cases in India and Japan will lead to lower demand for energy.
On Wall Street, indices ended lower after reports that the Biden administration was seeking to raise capital gains tax to nearly 40% for high net worth individuals, nearly double the current rate.
The proposal would require congressional approval, and analysts expected it to be watered down as it made its way through Congress.
“If they are going to tax people more and their net will go down, the value of this instrument is lower. Incentives matter,” said Kim Forrest, chief investment officer at Bokeh Capital Partners in Pittsburgh.
“A lot of the money that’s in the market at this point isn’t taxable, and I don’t think people do that math. Every time they see news (like this), they just sell, they want to take the earnings this year. “
The Dow Jones Industrial Average lost 321.41 points, or 0.94%, to 33,815.9, the S&P 500 lost 38.44 points, or 0.92%, to 4,134.98 and the Nasdaq Composite lost lost 131.81 points, or 0.94%, to 13,818.41. The gauge of MSCI stocks across the world fell 0.23% and the pan-European STOXX 600 index rose 0.68%. Emerging market equities rose 0.34%.
The MSCI’s largest Asia-Pacific stock index outside of Japan closed 0.4% higher, while Japan’s Topix rose 1.82%. Nikkei futures have not changed much.
Treasury yields fell alongside stocks on the capital gains tax issue.
The 10-year benchmarks last rose 7/32 to a return of 1.5416%, down from 1.564% on Wednesday night, remaining in a narrow range so far this week.
Oil prices ended up rising as lower production in Libya more than offset concerns over demand from India, the world’s third-largest consumer, where a second wave of coronavirus infections overwhelmed hospitals.
US crude rose 0.52% to $ 61.67 a barrel and Brent to $ 65.60, up 0.43% on the day.
In currency markets, the dollar rose as the pound gave up some of its recent large gains as the euro was weighed down by an ECB statement optimistic about the economic recovery but lacking details on the removal of the comeback.
The meetings of the US Federal Reserve and the Bank of Japan will follow next week.
The dollar index rose 0.178%, the euro down 0.15% to $ 1.2015.
The Japanese yen rose 0.10% against the greenback to 107.96 per dollar, while the British pound last traded at $ 1.3841, down 0.63% on the day.
The Russian ruble rose against the dollar after Moscow signaled the end of military exercises near the Ukrainian border, easing some of the geopolitical risk premium.
The ruble strengthened 1.78% against the greenback to 75.29 per dollar.
Turkish markets have suffered under the weight of expectations that US President Joe Biden will officially recognize the massacre of Armenians by the Ottoman Empire during World War I as an act of genocide.
The pound was down 1.64% against the US dollar at 8.31.
Spot gold fell 0.6% to $ 1,783.68 an ounce. Silver fell 1.71% to $ 26.12.