Stocks look set to slip in Asia following broadbased declines in U.S. benchmarks as investors mulled a proposal for higher capital gains taxes on the wealthy to help pay for President Joe Biden’s social plan.
Futures pointed lower in Japan, Hong Kong and Australia. U.S. contracts edged up after the steepest decline in five weeks for the S&P 500 Index. Speculation arose that traders may sell shares preemptively as Bloomberg News reported the Biden administration is considering a capital gains tax hike that could take the top rate for those earning $1 million or more as high as 43.4%. The dollar strengthened and Treasury yields dipped.
“Sticker shock over some of these tax figures will be hard to shake off for some investors,” Edward Moya, senior market analyst at Oanda, wrote in a note. “Some traders are looking for an excuse to lock in profits and they might choose to use this tax story as their catalyst.”
Investors are weighing the implications of higher taxes against the potential growth benefits of a spending program focused on infrastructure. Markets are also whipsawing on concerns about the continued spread of the coronavirus pandemic and a mixed batch of earnings reports.
AT&T Inc. jumped Thursday after beating earnings estimates, while Intel Corp. — the biggest chipmaker — slid after hours as it reported a drop in data-center revenue and a slump in gross profit margin.
Markets were little moved overnight by further assurance from European Central Bank President Christine Lagarde that the institution isn’t discussing any pullback in its emergency bond buying program even as economic data improve.
Elsewhere, Bitcoin steadied after declining for the sixth time in seven days. Investors already face a capital-gains tax if they hold the cryptocurrency for more than a year. Oil gained on strengthening demand signals from key economies.
Here are some key events to watch this week:
- U.S. releases new home sales data Friday.
These are some of the main moves in markets:
- S&P 500 futures climbed 0.1% as of 7:20 a.m. in Tokyo. The S&P 500 fell 0.9% Thursday.
- Nikkei 225 futures were down 0.8%.
- Hang Seng futures slipped 0.1% earlier.
- S&P/ASX 200 futures slid 0.2%.
- The Bloomberg Dollar Spot Index gained 0.2%.
- The euro traded little changed at $1.2016.
- The Japanese yen was flat at 107.96 per dollar.
- The yield on 10-year Treasuries fell about two basis points to 1.54%.
- West Texas Intermediate rose 0.7% to $61.84 a barrel.
- Gold was little changed at $1,784 an ounce.
— With assistance by Kamaron Leach, and Vildana Hajric