The last day of the business week is bringing even more fundamental reports.
Australia opened the day with both manufacturing and services PMIs for April, which indicated growth.
Japan published several somewhat encouraging inflation rate reports that demonstrated slight growth in what is considered a problem area for the Japanese economy.
The United Kingdom followed with its Gfk consumer confidence report for April, which came in at -15, better than last month’s, but worse than the forecast. The UK also delivered retail sales reports for March which were better than expected, but disappointed with the public borrowing data.
Like Australia, the United Kingdom also shared its latest PMI data, where all of the indices were better than the forecasts and all above 60, arguably the most consistent numbers in Europe.
Other European countries also reported their PMIs. Germany had a mixed batch of reports, with manufacturing jumping to 66.4, but the services (50.1) PMI was disappointing and dragged down the composite index.
The eurozone-wide data was slightly more encouraging. The manufacturing PMI climbed to 63.3 and the composite index exceeded investors’ expectations at 53.7.
The United States will publish its own manufacturing flash PMI for April later today.
The US markets are also turbulent today because President Biden revealed yet another tax increase plan. Even before he was elected President, Biden spoke about inequality and the need for a higher tax on the wealthiest Americans, and he now revealed that he plans to hike the capital gains tax. It could double from 20% to 39% and will affect everyone earning more than $1 million/year.
The tax increase is not particularly surprising, but it could trigger a massive sellout of stocks as investors try to switch to a lower tax bracket.
Still, most of the shock of this news was absorbed overnight and today all major US stock indices are set to trade at a minor gain as the earnings season continues.
Nevertheless, these developments have put pressure on cryptocurrencies, which haven’t yet fully recovered from the recent power outages in China. Bitcoin dropped below $50,000 and is trading at its lowest level in almost two months.
The most exciting event in the developing markets today is that Russia hiked its interest rate up to 5% to curb inflation. In addition, Russia is also removing some of its troops from the border with Ukraine, raising hopes that the conflict there won’t escalate at present. As a result, the ruble strengthened a bit.
