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Asian stock markets mixed on Biden’s proposed tax move

Asian stock

The Shanghai Composite Index added 0.2% to 3,473.01, the Nikkei 225 shed 0.7% to 28,983.31, the Hang Seng advanced 1% to 29,032.89, while S&P-ASX 200 lost 0.2% to 7,039.20

Asian stock markets were mixed Friday after Wall Street fell following a report that President Joe Biden will propose raising taxes on wealthy investors.

Shanghai, Hong Kong and Seoul gained while Tokyo and Sydney declined.

Wall Street’s benchmark S&P 500 index shed 0.9% overnight after Bloomberg News, citing unidentified sources, said Biden will propose raising taxes on people who make more than $1 million on stock trades.

That added to a mix of better corporate profits and U.S. hiring, unease that inflation and interest rates might rise and renewed coronavirus infections that have prompted some governments to tighten anti-disease controls.

Investors are struggling to navigate through a very muddled global outlook and earnings reports that have priced in a slow return to pre-pandemic life, said Edward Moya of Oanda in a report.

The Shanghai Composite Index added 0.2% to 3,473.01 while the Nikkei 225 in Tokyo shed 0.7% to 28,983.31. The Hang Seng in Hong Kong advanced 1% to 29,032.89.

The Kospi in Seoul gained 0.2% to 3,183.84 while Sydney’s S&P-ASX 200 lost 0.2% to 7,039.20. New Zealand was up while Singapore and Jakarta dropped.

Selling on Wall Street was widespread following the report about Biden’s tax plan.

According to Bloomberg, it would raise the capital gains tax (CGT) to 39.6% for investors who make more than $1 million, or more than double the current rate for Americans in that income bracket. It said a separate surtax on investment income could boost the total tax rate for wealthy investors as high as 43.3%.

Technology stocks, banks and companies that rely on consumer spending accounted for much of the drop. Treasury yields held mostly steady.

The S&P 500 dropped to 4,134.98. It is down 1.2% for the week after hitting a high on Friday.

The Dow Jones Industrial Average dropped 0.9% to 33,815.90. The Nasdaq composite lost 0.9% to 13,818.41.

The last round of U.S. government stimulus helped to lift retail investors in the biggest global market. Now, investors are weighing other proposals out of Washington, including tax changes and Biden’s proposed $2.3 million infrastructure spending package.

Investors also are looking for signs of possible economic improvement as the bulk of companies in the S&P 500 are reporting quarterly results. Also Thursday, the Labor Department reported the number of Americans applying for unemployment benefits dropped again last week to its lowest level since the pandemic struck.

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