AN index of stocks across the world fell on Thursday, weighed by Wall Street after reports that the Biden administration will propose a sharp increase to capital gains tax while the US dollar index rose as the euro and pound gave back recent gains.
Oil prices rose as concerns over Libyan output more than offset worries that rising coronavirus cases in India and Japan would cause energy demand to decline.
US crude rose 0.52% to US$61.67/barrel while Brent was at US$65.60, up 0.43% on the day.
On Wall Street, indexes ended lower after reports that the Biden administration is seeking to raise the capitals gains tax to near 40% for wealthy individuals – almost double the current rate.
The proposal would need congressional approval, and analysts expected it to be watered down as it makes its way through Congress.
“If they’re going to tax people more and their net is going to fall, the value of that instrument is lower. Incentives matter,” said Kim Forrest, chief investment officer at Bokeh Capital Partners in Pittsburgh.
“A lot of money that’s in the market at this point is non-taxable, and I don’t think people do that calculation. Whenever they see news (like this), they just sell, they want to take the gains this year.”
The Dow Jones Industrial Average fell 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 dropped 131.81 points or 0.94% to 13,818.41.
MSCI’s gauge of stocks across the globe shed 0.23% and the pan-European STOXX 600 index rose 0.68%. Emerging market stocks rose 0.34%.
MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.4% higher, while Japan’s Topix rose 1.82%. Nikkei futures were little changed.
Treasury yields fell alongside stocks on the capital gains tax issue.
Benchmark 10-year notes last rose 7/32 in price to yield 1.5416% from 1.564% late on Wednesday, remaining in a tight range so far this week.
In the currency markets, the greenback rose as the pound gave back some of its recent sharp gains while the euro was weighed by a European Central Bank (ECB) statement that was hopeful on the economic recovery but lacking in details about the stimulus removal.
The US Federal Reserve and Bank of Japan meetings follow next week.
The US dollar index rose 0.178% with the euro down 0.15% to US$1.2015.
Spot gold dropped 0.6% to US$1,783.68 an ounce. Silver fell 1.71% to US$26.12. – April 23, 2021
