Futures rose Friday as investors digested a proposal for higher taxes to pay for President Joe Biden’s fiscal stimulus.
The upbeat sentiment signaled the S&P 500 Index may be poised to rebound from the steepest decline in five weeks that followed a Bloomberg News report Biden plans to nearly double the capital gains rate on the wealthy. Treasuries and the dollar dipped.
Investors are weighing the implications of higher taxes against the potential spillover benefits of spending on infrastructure. While loose central bank policy is helping support stocks near record highs, these levels look precarious given worsening news about the spread of Covid-19 in parts of the world.
Read: Fat Valuations and Tech Stocks Seen as at Risk in Biden Tax Plan
“We don’t think it derails the equity market recovery,” said Nupur Gupta, portfolio manager at Eastspring Investments, said of the tax proposal on Bloomberg TV. “Equity sentiment does appear to be stretched, which is why any negative news that you get can lead to a consolidation in markets in the short term.”
European stocks erased an earlier loss amid a mixed batch of earnings. Shares in Swedish telecom Telia Co. fell as much as 3% as analysts flagged “worrying” service revenue trends in the first quarter even though overall results were in line.
Meanwhile, oil rose but remains on course for a weekly drop of around 2% as energy demand wavers with the virus rampant in key markets outside the U.S.
Elsewhere, Bitcoin slid below $50,000, headed for its seventh loss in eight days. Investors already face a capital-gains tax if they hold the cryptocurrency for more than a year.
The U.S. releases new home sales data later on Friday.
These are some of the main moves in markets:
- Futures on the S&P 500 Index increased 0.3% as of 9:05 a.m. London time.
- The Stoxx Europe 600 Index was little changed.
- The MSCI Asia Pacific Index gained 0.3%.
- The MSCI Emerging Market Index gained 0.6%.
- The Bloomberg Dollar Spot Index declined 0.3%.
- The euro rose 0.3% to $1.2056.
- The British pound jumped 0.4% to $1.389.
- The onshore yuan weakened 0.1% to 6.495 per dollar.
- The Japanese yen was little changed at 107.92 per dollar.
- The yield on 10-year Treasuries jumped two basis points to 1.56%.
- The yield on two-year Treasuries increased less than one basis point to 0.15%.
- Germany’s 10-year yield fell one basis point to -0.26%.
- Japan’s 10-year yield decreased less than one basis point to 0.071%.
- Britain’s 10-year yield dipped less than one basis point to 0.737%.
- West Texas Intermediate crude gained 0.6% to $61.82 a barrel.
- Brent crude rose 0.4% to $65.69 a barrel.
- Gold was little changed at $1,783.08 an ounce.
— With assistance by Shery Ahn, and Joanna Ossinger