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Global equities fall on lockdowns, potential US tax hike

tax hike

European shares finished near two-week lows, while oil prices soared following steep losses on Tuesday

Global equities slipped and the dollar hovered near four-month highs on Wednesday as concerns about extended economic lockdowns in Europe and the potential for higher taxes in the US weighed on investor sentiment.

European shares finished near two-week lows, while oil prices soared following steep losses on Tuesday after one of the world’s largest container ships ran aground in the Suez Canal. Authorities were still trying to clear the ship from the vital shipping lane on Wednesday afternoon.

The mood is fairly fragile as all the optimism that characterised the push higher over the past two or three weeks in shares is starting to bleed away on talk of a European third wave and extensions of pandemic lockdowns in Germany and France, said Michael Hewson, chief market analyst at CMC Markets.

MSCI’s gauge of stocks across the globe dropped 0.94 per cent after steep declines in Asia and modest losses in Europe.

On Wall Street, the Dow Jones Industrial Average dropped 2.37 points, or 0.01 per cent, to 32,420.78, the S&P 500 shed 21.37 points, or 0.55 per cent, to 3,889.15 and the Nasdaq Composite declined 265.81 points, or 2.01 per cent, to 12,961.89.

The Ifo Institute said Germany’s extended lockdown is delaying a recovery. It cut its 2021 growth forecast for Europe’s biggest economy to 3.7 per cent from 4.2 per cent previously.

The IHS Markit euro zone flash composite purchasing management index advanced to 52.5 in March from 48.8 in February in a surprise return to growth, as factories ramped up production at the fastest pace in over 23 years.

But April numbers could be hit by surging COVID-19 infections across Europe.

Benchmark 10-year notes rose 8/32 in price to yield 1.6102 per cent, from 1.638 per cent late on Tuesday.

US Treasury Secretary Janet Yellen said on Tuesday the American economy remains in crisis from the pandemic as she defended developing plans for future tax increases to pay for new public investments.

Federal Reserve Chair Jerome Powell told US lawmakers that a coming round of post-pandemic price increases will not fuel a destructive breakout of inflation.

The dollar index advanced 0.156 per cent, with the euro down 0.27 per cent to $1.1817.

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