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US futures edged up on Friday, regaining some stability, after President Joe Biden proposed a sharp increase in capital gains tax for the wealthiest Americans, which hit investor sentiment and triggered a sell-off in cryptocurrencies.

Stock-index futures largely shook off any overnight weakness, but the mood remained cautious. Dow Jones futures rose by 0.2%, whilst S&P 500 futures gained 0.24% and Nasdaq 100 futures inched 0.18% higher.  

The tax announcement affected the already shaky markets recovery, Michael Hewson, chief market analyst at CMC Markets, said. 

“While one could argue that the prospect of higher taxes is never welcome, and a doubling of a key tax rate even more so, the likelihood of anything of this nature passing through an evenly split Congress, lies somewhere between slim and none, however in these highly uncertainty times it doesn’t take much to spook a little bit of profit taking, in what has already been a very choppy week. The reality is taxes may rise but certainly not by as much being touted,” Hewson said. 

“The turn in sentiment was seen in yields as well, with 10-year US Treasuries higher on the day, as yields fell -1.7bps to 1.538% after been as high as 1.5856% before the news”, Deutsche Bank said in a note.

Bitcoin remained below the $50,000 mark, which it broke the previous day for the first time since February. The price was last around $48,193 on Friday in Europe. 

“It is clear that bitcoin is more sensitive to capital gains tax threats than most ‘asset’ classes. The threat of regulation, either directly in developed markets or indirectly via the taxman, has always been crypto’s Achilles’s heel, in my opinion,” Jeffrey Halley, senior markets analyst at OANDA said. 

In the United States, cryptocurrencies are treated like property, not currencies, by the taxman. 

European stocks fell on Friday ahead of a flurry of economic data. The German DAX was last down 0.3% and the UK’s FTSE 100 fell by 0.26%. The pan-European Euro Stoxx 50 was also down, by 0.22%. 

Key data to watch out for includes April’s flash PMI data as well as the UK’s public sector borrowing figure and the country’s first-quarter retail sales, which will likely be affected by the lockdown restrictions dominating the first months of the year. Monthly data had shown retail sale declines. 

The European Central Bank meeting on Thursday was largely uneventful and did not impact stocks for the …read more

Source:: Business Insider


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US futures edge up but Biden’s tax proposals dent investor sentiment and hit cryptocurrencies

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