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NEW YORK, April 23 — Wall Street stocks tumbled Thursday following reports the Biden administration is considering a tax hike on wealthy stock investors, while European equities rallied as the European Central Bank kept its stimulus taps wide open.
US indices rallied Wednesday, but have been under pressure most of the week amid concerns about lofty equity valuations and rising coronavirus infections in India and other countries.
But losses deepened Thursday following reports President Joe Biden is developing a plan to increase the tax rate on profits from stock transactions to 39.6 per cent from 20 per cent on people earning more than US$1 million (RM4.11 million).
All three major US indices dropped 0.9 per cent.
Any tax plan faces a long process on Capitol Hill before becoming a reality, but analysts said the reports indicate tax hikes are very much in the mix in Washington. Biden also called for an increase in corporate taxes to finance his US$2 trillion infrastructure package.
“The market was reminded that this was a possibility and now this whole prospect of higher taxes is going to be sitting out there,” said Briefing.com analyst Patrick O’Hare, adding that it also served as “an excuse to do some selling.”
Earlier, Frankfurt stocks ended the day 0.8 per cent higher and Paris climbed 0.9 per cent following the ECB announcement.
ECB keeps taps open
As widely expected, the ECB kept its massive pandemic-fighting stimulus package in place as Europe’s ailing economies are facing slow recoveries amid a resurgence of Covid cases and slow vaccination campaigns.
“European markets have been cheered by the continued dovish stance of the ECB and their decision to ‘significantly’ increase the pace of bond purchases for the second quarter,” said Chris Beauchamp, chief market analyst at online trading platform IG.
“This has, unsurprisingly, put pressure on the euro, which has edged back against the US dollar, but overall the continued support for the eurozone economy has bolstered investor enthusiasm for eurozone assets,” he added.
The euro traded at US$1.2016, down from US$1.2035 late on Wednesday.
Among individual companies, shares in Credit Suisse shed 2.1 per cent after the Swiss banking giant suffered a first-quarter loss on fallout from the bankruptcies of British finance firm Greensill and US hedge fund Archegos.
Administrators overseeing Greensill’s activities meanwhile declared its Australian parent group had entered liquidation.
Key figures around 2130 GMT
New York – Dow: DOWN 0.9 per cent at 33,815.90 (close)
New York – S&P 500: DOWN 0.9 per cent at 4,134.98 (close)
New York – Nasdaq: DOWN 0.9 per cent at 13,818.41 (close)
London – FTSE 100: UP 0.6 at 6,938.24 (close)
Frankfurt – DAX 30: UP 0.8 per cent at 15,320.52 (close)
Paris – CAC 40: UP 0.9 per cent at 6,267.28 (close)
EURO STOXX 50: UP 1.0 per cent at 4,014.80 (close)
Tokyo – Nikkei 225: UP 2.4 per cent at 29,188.17 (close)
Hong Kong – Hang Seng Index: UP 0.5 per cent at 28,755.34 (close)
Shanghai – Composite: DOWN 0.2 per cent at 3,465.11 (close)
Euro/dollar: DOWN at US$1.2016 from US$1.2035
Pound/dollar: DOWN at US$1.3840 from US$1.3931
Euro/pound: UP at 86.78 pence from 86.39 pence
Dollar/yen: DOWN at 107.94 from ¥108.08
Brent North Sea crude: UP 0.1 per cent at US$65.40 per barrel
West Texas Intermediate: UP 0.1 per cent at US$61.43 per barrel — AFP