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European stocks eye weekly drop, Bitcoin slides on U.S. tax hike plan

EconomyApr 23, 2021 09:26AM ET
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2/2 © Reuters. Man wearing a face mask is seen inside the Shanghai Stock Exchange building, as the country is hit by a novel coronavirus outbreak, at the Pudong financial district in Shanghai 2/2

By Carolyn Cohn

LONDON (Reuters) - European stocks were on track for their first weekly loss in eight and Bitcoin hit its lowest in nearly seven weeks on Friday as investors assessed the impact of a possible U.S. capital gains tax hike.

President Joe Biden will roll out a plan to raise taxes on the wealthiest Americans, including the largest-ever increase in levies on investment gains, to fund about $1 trillion in childcare, universal pre-kindergarten education and paid leave for workers, sources familiar with the proposal said.

Biden's administration is seeking an increase in the capital gains tax to near 40% for wealthy individuals, almost double the current rate, the sources said.

"The devil is always going to be in the detail," said Ned Rumpeltin, European head of currency strategy at TD Securities, adding that the Democrats' narrow majority could make the proposals hard to pass.

The pan-European STOXX 600 dropped 0.4% and was on course for a 1% weekly drop, with a surge in global coronavirus cases also weighing. https://tmsnrt.rs/2FkV6wq (EU)

S&P futures gained 0.25%, however, after the Dow Jones Industrial Average ended down nearly 1% on the tax proposal.

Bitcoin dropped below the $50,000 level to its lowest level in nearly seven weeks, before recovering some ground to trade at $49,350, down 4.5%. Ethereum was down 6.5% at $2,250.

For a graphic on Crypto tumbles:

https://fingfx.thomsonreuters.com/gfx/mkt/qzjvqzmdjpx/bitcoin.PNG

World stocks were flat on the day and down 0.9% on the week after hitting record highs close to 3,000 on Monday.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.65%, however, with Chinese blue-chip shares up 0.91%, supported by green and healthcare stocks. Japan's Nikkei stock index slid 0.57%.

"I don't think people are completely negative on the fact that those (U.S.) tax changes are being flagged," said James McGlew, executive director of corporate stockbroking at Argonaut.

"Ultimately it's money that will feed back into the economy."

EUROPEAN GROWTH

The euro zone economy will grow more slowly this year than earlier thought and a temporary gain in inflation is likely to exceed a previous projection, a European Central Bank survey showed on Friday, a day after the bank left policy unchanged.

However, IHS Markit's flash Composite Purchasing Managers' Index for the euro zone, seen as a good guide to economic health, rose to a nine-month high of 53.7 in April, confounding expectations in a Reuters poll for a dip to 52.8. Anything above 50 indicates growth.

The United States numbers are due at 1345 GMT.

"The euro zone has enjoyed a record manufacturing boom this month as the continent sees its early stages of the recovery efforts reaping rewards," said Mihir Kapadia, CEO of Sun Global Investments, in a client note.

"We could expect some hiccups along the way, but sentiment should remain higher for some time.”

The euro rose 0.3% on the day to $1.2052 after dipping a day earlier, within sight of a seven-week high hit earlier this week.

The dollar was steady against the yen at 107.92 and the dollar index, which tracks it against a basket of currencies of other major trading partners, fell 0.26%.

The yield on benchmark 10-year Treasury notes was steady at 1.5489% after the capital gains tax reports pulled yields lower on Thursday. Germany's 10-year government bond yield, the benchmark of the euro area, was also flat.

Oil prices were steady, with support from the European economic recovery countered by persisting coronavirus concerns as infections surged to record levels in India. [O/R]

U.S. crude edged up 0.1% to $61.50 a barrel and global benchmark Brent crude was flat at $65.35 per barrel.

Spot gold was little changed at $1,785 per ounce but was still set for a weekly rise on soft Treasury yields and a subdued dollar. [GOL/]

European stocks eye weekly drop, Bitcoin slides on U.S. tax hike plan
 

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Comments (9)
Adam Paine
Adam Paine Apr 23, 2021 3:00AM ET
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I love how we're turning "shrug off" into "shake off" now. lol
Kaveh Sun
Kaveh Sun Apr 23, 2021 1:54AM ET
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Crypto market volumn is thin. A whale w a bil in his hand can run the market up or down fast. Crypto market is ez to manipulate by whales n SEC cant do nothing about it. It is off gov reach.
Connecticut Yankee
A_Jaundiced_Eye Apr 23, 2021 12:44AM ET
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"I don't think people are completely negative on the fact that those tax changes are being flagged. Ultimately it's money that will feed back into the economy." Uh, huh.  Meanwhile, you can bet the guy is selling HIS stocks with both hands !
Bilal Hassan
Bilal Hassan Apr 23, 2021 12:44AM ET
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yeah right and miss out on the gains in next 12 months, keep the money on sidelines and let the inflation eat it up just to save some money on tax. millionaires are lot smarter than that
Bilal Hassan
Bilal Hassan Apr 23, 2021 12:44AM ET
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miss out on the gains in next 12 months, keep the money on sidelines and let the inflation eat it up just to save some money on tax.
George Pichurov
George Pichurov Apr 23, 2021 12:37AM ET
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o yeah, with democrat full control, no need to worry 'bout that
danny Levine
danny Levine Apr 22, 2021 11:37PM ET
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tax, crime, inflation, indoctrination, etc. define the Biden administration.
Franco Dominguez
Franco Dominguez Apr 22, 2021 11:37PM ET
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satanism
Chris Hall
Chris Hall Apr 22, 2021 11:37PM ET
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well i guess the Qanons are here ... good thing we was missing some crazy 🤡s that spit out nonsensical evaluation of there Facebook meme facts
Jesse James
Jesse James Apr 22, 2021 11:37PM ET
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Chris Hall oohh you're so oppressed.
ZS Beck
ZS Beck Apr 22, 2021 11:37PM ET
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Coin Pump and dump.
king michael
king michael Apr 22, 2021 11:31PM ET
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So far sleeping Biden is doing everything to destroy US. Mounting gigantic debt to support undocumented and lazy people. Bring unlimited immigrants and add them to unemployed. Claiming COVID credit purely belong to the hard working and greedy pharm institutes and has minimum to do with Biden government ..... definitely worse than Trump.
President Xi Jinping
President Xi Jinping Apr 22, 2021 11:31PM ET
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What are you five?
Spencer Pimer
Spencer Pimer Apr 22, 2021 11:31PM ET
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What are you, naive?
Spencer Pimer
Spencer Pimer Apr 22, 2021 11:31PM ET
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When you have to pay $5 for a coke can, I think you will be wishing Trump was still your president
William Penny
William Penny Apr 22, 2021 11:31PM ET
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some people are never happy
President Xi Jinping
President Xi Jinping Apr 22, 2021 11:25PM ET
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Rueters is actually owned by china
Rodrigo Chavez
Rodrigo Chavez Apr 22, 2021 10:59PM ET
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asian markets more chad than American markets
chino Choi
chino Choi Apr 22, 2021 10:59PM ET
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sure seems that way . but what the *****do they know ...
 
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