Asian shares shake off US tax worries, cryptocurrencies plunge

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.

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 $50,000 level to a low of $48,338.37, its lowest level in nearly seven week. Ethereum plunged nearly 12 per cent before trimming losses, and was last down about 7 per cent at $2,240.65.

Read more: Can 'digital currency' be an alternative to bitcoin?

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

"There were a couple of subtle acknowledgements 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 per cent for wealthy individuals, almost double the current rate. The Dow Jones Industrial Average ended down 0.94 per cent.

"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 feed back 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 per cent.

Chinese blue-chip shares rose 0.93 per cent, supported by consumer staples, health care and financial firms. Hong Kong's Hang Seng rose 0.93 per cent and Seoul's Kospi added 0.1 per cent.

Read more: Gold set for third straight weekly gain as US yields, dollar pull back

Japan's Nikkei stock index slid 0.7 per cent.

In the currency market the euro edged up less than 0.1 per cent on the day to $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 per cent to 91.217.

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

US crude rose 0.5 per cent to $61.72 a barrel and global benchmark Brent crude added 0.3 per cent to $65.61 per barrel.

Spot gold rose about 0.15 per cent to $1,786.86 per ounce.