Asia Stocks to Follow U.S. Lower on Tax Proposal: Markets Wrap

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Asia Stocks to Follow U.S. Lower on Tax Proposal: Markets Wrap

Emily Barrett
·2 min read

(Bloomberg) -- Stocks look set to slip in Asia Friday following broad-based declines in U.S. benchmarks as investors mulled a proposal for higher 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 raising the tax on capital gains to 39.6% for those earning more than $1 million a year.

Treasury yields dipped overnight and the dollar was steady in early Asia trade.

“For the short term most likely we’ll continue to see volatility as investors will use the current environment to capture gains,” said Teresa Kong, portfolio manager at Matthews International Capital Management, LLC.

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 worsening news about the spread of Covid-19 in parts of the world 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.

The U.S. releases new home sales data later on Friday.

These are some of the main moves in markets:

Stocks

S&P 500 futures climbed 0.1% as of 8:25 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%.

Currencies

The Bloomberg Dollar Spot Index was steady.The euro traded little changed at $1.2016.The Japanese yen was flat at 107.96 per dollar.

Bonds

The yield on 10-year Treasuries fell about two basis points to 1.54%.

Commodities

West Texas Intermediate rose 0.7% to $61.87 a barrel.Gold was little changed at $1,784 an ounce.

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