Stocks Drop on Biden Plan to Lift Capital-gain Tax

US stocks had their biggest slide in five weeks after President Joe Biden was said to propose almost doubling the capital-gain tax for the wealthy. The dollar advanced. The S&P 500 declined by 0.92% to 4,134.98 while Dow Jones was down 321.41 points (0.94%) to 33,815.90.

Biden Eyeing Tax Rate as High as 43.4% in Next Economic Package

President Joe Biden will propose almost doubling the capital gains tax rate for wealthy individuals to 39.6% to help pay for a raft of social spending that addresses long standing inequality. For those earning US$1 million or more, coupled with an existing surtax on investment income, means that federal tax rates for wealthy investors could be as high as 43.4%.

US Jobless Claims Fall to Pandemic Low as Economy Accelerates

Applications for US state unemployment insurance unexpectedly plunged to a fresh pandemic low as the job market recovery gathers steam. Initial claims in regular state programs decreased by 39,000 to 547,000 in the week ended April 17The prior week’s figure was revised up to 586,000. The job market is strengthening as employers look to fill positions that were left empty by pandemic restrictions that have now been eased.

US Sales of Previously Owned Homes Fall to a Seven-month Low

Sales of previously owned US homes declined in March to a seven-month low as a surge in prices and a lack of available properties limited potential buyers. Contract closings decreased 3.7% from the prior month to an annualized 6.01 million, after a revised 6.24 million in February. Borrowing costs remain historically low and that’s keeping demand elevated.

Lagarde Says ECB Isn’t Discussing Phase-out of Stimulus

European Central Bank President Christine Lagarde said the institution isn’t discussing the phasing out of its emergency bond buying even as it sees signs that the economy is starting to shake off the coronavirus pandemic. While noting that medium-term risks for growth are balanced, she pushed back against any suggestion the ECB is thinking about scaling back stimulus, describing the idea as “premature.”

French Manufacturing Confidence Jumps to Two-year High

French manufacturing confidence jumped in April to the highest level in nearly two years and exceeded its long-term average for the first time since the start of the pandemic. Sentiment improved in all the main sub-sectors, and companies viewed their order books as particularly strong. Gauges for services and retail slumped after renewed restrictions to contain the spread of Covid hit stores and hospitality.

Thai Bonds Turn Around With Demand at Both Ends of Curve

Local investors are bidding up shorter-dated bonds as the spread of Covid-19 in the country convinces them to seek out the safest assets. Global funds are buying longer maturities after the yield premium over Treasuries improved and on the prospect of baht gains. Benchmark 10-year yields have dropped to 1.90% from their peak in March, while five-year yields have declined about the same amount to 1%.

Oil Edges Up With Demand Recovery Signs Offsetting Virus Surge

Oil edged higher as strengthening demand signals from key economies offset concern around the rampant virus resurgence in countries such as India. Brent crude for June settlement rose US$0.08 to US$65.40 per barrel.

Source: Affin Hwang Research - 23 Apr 2021