Biden spending plan boosts US equities, Europe falls

US stocks moved higher on Wednesday ahead of President Joe Biden unveiling a $2 trillion infrastructure spending plan, while stocks fell elsewhere.

The Dow, S&P 500, and Nasdaq Composite all climbed as trading got underway even though the Biden administration plans to hike corporate tax from 21 to 28 percent to partially pay for the additional spending.

"The issue now is that the administration apparently wants to pay for more of the programme with higher taxes instead of just borrowing, and that has a chance to eventually take a bite out of earnings," said market strategist JJ Kinahan at TD Ameritrade.

"It's way too soon to talk about the tax impact in too much detail, but analysts do say if corporate taxes rise, it's something to potentially worry about in 2022, not 2021," he added.

The advance in US equities also comes despite stubborn concerns that stimulus cash and pent-up consumer demand could stoke inflationary pressures and in turn force central banks to hike interest rates.

The has seen equity prices occassionaly hit by losses in recent weeks as investors reevaluate the prospects higher interest rates may have on businesses.

The issue has reached a point where dealers are spooked by good news, with the possibility of more government spending forcing benchmark 10-year US Treasury yields — a gauge of future borrowing costs — to almost double since the turn of the year.

Eyes will remain on US bond yields when Biden unveils the details of the infrastructure plan later on Wednesday.

"Today's key event will be the unveiling of Biden's infrastructure plan – another bold move by the US President," said OANDA analyst Sophie Griffiths.

"This comes hot on the heels of the recently approved $1.9-trillion stimulus plan, further bolstering expectations for a strong US economic recovery," she added.

Elsewhere, world oil prices dipped, as traders adopted a wait-and-see approach on the eve of Thursday's OPEC oil output meeting.

Crude futures had slid the previous day after the Suez Canal — a key trade chokepoint — was unblocked after a near week-long shutdown.

Markets also digested a US private-sector employment report from payroll services firm ADP, which showed a boost in hiring last month, before Friday's key non-farm payrolls data that will provide a crucial health-check on the US economy.

London stocks shed 0.3 percent in afternoon trade as investors also tracked a badly-received £7.6-billion ($10.4 billion, 8.9 billion euros) flotation for UK app-driven food delivery service Deliveroo.

Deliveroo, which has boomed on strong demand from locked-down consumers, saw its share price slump by almost a third as the initial public offering turned up cold amid criticism over the treatment of its riders.

Elsewhere in Europe, Paris stocks shed 0.3 percent and Frankfurt was 0.2 percent lower, after earlier losses in Asia.

The dollar held close to a one-year yen high as a widely-expected surge in global economic growth sees money move out of the safe-haven Japanese unit.

The euro dipped versus the dollar on news that eurozone consumer price inflation accelerated to 1.3 percent in March from 0.9 percent in February.

Key figures around 1330 GMT 

New York – Dow: UP 0.2 percent at 33,138.91

London – FTSE 100: DOWN 0.3 percent at 6,750.21 points

Paris – CAC 40: DOWN 0.3 percent at 6,070.93

Frankfurt – DAX 30: DOWN 0.2 percent at 14,983.13

EURO STOXX 50: DOWN 0.3 percent at 3,915.91

Tokyo – Nikkei 225: DOWN 0.9 percent at 29,178.80 (close)

Hong Kong – Hang Seng: DOWN 0.7 percent at 28,378.35 (close)

Shanghai – Composite: DOWN 0.4 percent at 3,441.91 (close)

Dollar/yen: UP at 110.79 yen from 110.36 yen at 2100 GMT

Euro/dollar: DOWN at $1.1728 from $1.1764

Pound/dollar: UP at $1.3772 from $1.3765

Euro/pound: DOWN at 85.15 pence from 85.44 pence

West Texas Intermediate: DOWN 0.7 percent at $60.14 per barrel

Brent North Sea crude: DOWN 0.7 percent at $63.69 per barrel