Asia stocks mixed after tax proposal riles US: markets wrap

Asian stocks fluctuated and futures rallied Friday following broad-based declines in US benchmarks as investors weighed a proposal for higher taxes on the wealthy to help pay for President Joe Biden’s social plan.

Shares were steady in China and rose in Hong Kong. MSCI Inc.’s regional gauge rose despite weakness in Japan. US contracts edged up after the steepest decline in five weeks for the S&P 500 Index on a Bloomberg News report that the Biden administration is considering raising the tax on capital gains to 39.6% for those earning more than $1 million a year.

Oil pared a weekly loss as traders considered signs of recovery in the US, alongside spikes in virus cases that threaten to further constrain activity in other key markets. Treasuries and the dollar dipped.

“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.”

Investors are weighing the implications of higher taxes against the potential growth benefits of a US spending program focused 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.

Traders are also following a mixed batch of earnings reports. AT&T Inc. jumped Thursday after beating estimates, while Intel Corp. — the biggest chipmaker — slid after hours on a slump in gross profit margin.

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 US releases new home sales data later on Friday.

These are some of the main moves in markets:

Stocks

• S&P 500 futures climbed 0.2% as of 3:00 p.m. in Tokyo. The index fell 0.9%.
• Japan’s Topix Index was down 0.4%.
• The Shanghai Composite was steady.
• The Hang Seng climbed 0.7%.
• South Korea’s Kospi Index edged 0.2% higher.
• Australia’s S&P/ASX 200 Index was flat.

Currencies

• The Bloomberg Dollar Spot Index was down less than 0.2%.
• The euro was 0.1% higher at $1.2024.
• The Japanese yen was little changed at 107.89 per dollar.

Bonds

• The yield on 10-year Treasuries rose two basis points to 1.56%.
• Australia’s 10-year yield was four basis points higher at 1.74%.

Commodities

• West Texas Intermediate was up 0.7% at $61.85 a barrel.
• Gold was 0.1% higher at $1 786 an ounce.