A key gauge of Asian shares rose on Friday, supported by gains in China and a decision by the European Central Bank to maintain stimulus, while investors largely shrugged off the impact of a possible US capital gains tax hike.

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Modestly firmer equity markets contrasted with ructions in cryptocurrencies as investors fretted over the impact of tax changes. Bitcoin’s rout deepened, dropping below the USD 50,000 level to a low of USD 48,338.37, its lowest level in nearly seven-week. Ethereum plunged nearly 12 percent before trimming losses and was last down about 7 percent at USD 2,240.65.

The ECB’s decision to leave policy on hold came despite its prediction of a strong rebound in the eurozone economy from mid-year as COVID-19 infections are brought under control.

”There were a couple of subtle acknowledgments today that an upgrade to forecasts is likely coming at the June 10 meeting,” said Ray Attrill, head of FX strategy at National Australia Bank. ”Lagarde did highlight the pick-up in vaccinations and noted high-frequency data are confirming to ECB staff that their previous view of an improvement in the medium-term (is) on course.”

In a hit to stock market sentiment overnight, the administration of US President Joe Biden was reported to be seeking an increase in the capital gains tax to near 40 percent for wealthy individuals, almost double the current rate. The Dow Jones Industrial Average ended down 0.94 percent.

”The move on the Dow overnight I think needs to be seen in the context that it’s had a remarkable run-up,” said James McGlew, executive director of corporate stockbroking at Argonaut. ”I don’t think people are completely negative on the fact that those tax changes are being flagged. Ultimately it’s money that will feedback into the economy.”

In Asia on Friday MSCI’s broadest index of Asia-Pacific shares outside Japan shook off early small losses to rise 0.3 percent.

Chinese blue-chip shares rose 0.93 percent, supported by consumer staples, health care and financial firms. Hong Kong’s Hang Seng rose 0.93 percent and Seoul’s Kospi added 0.1 percent. Japan’s Nikkei stock index slid 0.7 percent.

In the currency market, the euro edged up less than 0.1 percent on the day to USD 1.2023 after dipping a day earlier. The dollar was slightly lower against the yen at 107.92 and the dollar index, which tracks the greenback against a basket of currencies of other major trading partners, fell 0.07 percent to 91.217.

The yield on benchmark 10-year Treasury notes was little changed at 1.554 percent after the capital gains tax reports pulled yields lower on Thursday.

US crude rose 0.5 percent to USD 61.72 a barrel and global benchmark Brent crude added 0.3 percent to USD 65.61 per barrel. Spot gold rose about 0.15 percent to USD 1,786.86 per ounce.

First Published:Apr 23, 2021 9:41 AM IST