Wall St Affected by Report on Capital Tax Increase; the dollar goes up

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NEW YORK – Global stocks fell on Thursday, weighed down by Wall Street after a report that the Biden administration will propose a sharp capital gains tax hike, while the dollar index gained as the the euro and the pound lost part of the month’s gains.

Oil prices were little changed, as concerns over Libyan production offset concerns that rising coronavirus cases in India and Japan would lead to lower demand for energy.

On Wall Street, indices fell after a Bloomberg report that the Biden administration would propose to raise capital gains tax to nearly 40% for high net worth individuals, nearly double the current rate.

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“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 fell 394.34 points, or 1.16%, to 33,742.97, the S&P 500 lost 44.88 points, or 1.08%, to 4,128.54 and the Nasdaq Composite lost 153.66 points, or 1.1%, to 13,796.56. The MSCI index of equities across the world lost 0.35% and the pan-European STOXX 600 index rose 0.68%. Emerging market equities rose 0.28%.

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The MSCI’s largest Asia-Pacific stock index outside of Japan closed up 0.28%, while Japan’s Topix rose 1.82%.

Treasury yields fell alongside stocks on the capital gains tax issue.

The 10-year benchmarks last rose 3/32 to a return of 1.5539%, down from 1.564% on Wednesday night, remaining in a narrow range so far this week.

Oil prices were in and out of positive territory as traders weighed down production in Libya with concerns over demand from India, the world’s third-largest consumer.

“The market has realized that a global return in demand for oil cannot happen without a return from the world’s largest economies,” said Bjornar Tonhaugen, head of oil markets at Rystad Energy, noting that “l India is plunging deeper and deeper into a major crisis with new record infections every day.

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US crude rose 0.02% to $ 61.36 a barrel and Brent to $ 65.30, down 0.03% 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 0.247%, while the euro fell 0.22% to $ 1,2006.

The Japanese yen strengthened 0.02% against the greenback to 108.05 per dollar, while the British pound last traded at $ 1.3833, down 0.69% 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 1.77% against the greenback to 75.57 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 0.7% to $ 1,781.86 an ounce. Silver fell 1.83% to $ 26.09.

(Additional reporting by Simon Jessop in London, Ross Kerber in Boston, Lucia Mutikani in Washington and David Henry and Scott DiSavino in New York; Editing by Nick Zieminski)

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In-depth reporting on The Logic’s innovation economy, presented in partnership with the Financial Post.

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