By Geoffrey Smith
Investing.com – The ruling Democratic Party is making plans to raise taxes on share buybacks. Joe Biden calls on Xi Jinping to calm US-China tensions, but the reading suggests little has changed. Stocks should open higher but are still on track for a losing week. US producer price data for August is due and Gazprom (MCX: GAZP) finally completes construction of the controversial Nord Stream 2 pipeline. Here’s what you need to know about the financial markets on Friday, September 10.
1. Dems to tax redemptions
The Democratic Party is drafting legislation that would tax share buybacks as it broadens its quest for new revenue to fund its expansive spending policies.
The proposals, written by the Senses. Sherrod Brown (Ohio) and Ron Wyden (Oregon), would impose a 2% excise duty on buybacks, which have become the preferred means of distribution to shareholders for many U.S. companies and accounted for 52% of all shareholders S&P company returns 500 last year.
The news comes as Democratic lawmakers argue over how to allocate the $ 3.5 trillion they intend to spend on bills currently under consideration in Congress. The buy-back tax would only bring in $ 172 billion over 10 years, according to the Wall Street Journal.
2, Biden, Xi call, talk to each other
US President Joe Biden called his Chinese counterpart Xi Jinping for the first time in six months, in a bid to relieve some of the heat of a relationship that hasn’t improved since the more combative Donald Trump left.
Readings from both sides of the call did not suggest any major changes in current policy.
The call comes just weeks after the chaotic US exit from Afghanistan, which created a power vacuum that China has indicated it could partially fill. China granted $ 31 million in aid to Afghanistan on Thursday and said it would work with the Taliban. However, the planned aid is far from replacing financial support from the International Monetary Fund and the World Bank, both of which have suspended their work with the country.
A wave of White House activity over the past few days has helped shift the news agenda in recent days, with vaccination warrants for federal employees and a lawsuit against the Texas abortion law distract from Central Asia.
3. Stocks should open to the upside; Observed PPI data
US stocks are expected to open higher later, reversing Thursday’s losses but still on track for their first negative week of three.
As of 6:20 a.m. ET, Dow Jones futures were up 176 points, or 0.5%, while S&P 500 futures were up 0.4% and Nasdaq 100 futures were up. 0.3% increase.
Attention will be paid later to the United States producer price inflation data at 8:30 a.m. ET, where a new multi-year high of 8.2% is expected.
Stocks likely to be in the spotlight include American Outdoor Brands (NASDAQ: SWBI), after the company released a disappointing forecast Thursday night. News of a New York City price cap court challenge is pushing stock prices for food delivery companies like Uber (NYSE: UBER) and DoorDash (NYSE: DASH) at the margin.
4. Gazprom completes Nord Stream 2, but gas prices continue to rise
European natural gas prices fell slightly after Russian gas giant Gazprom (LON: GAZPq) announced that it had completed construction of the Nord Stream 2 pipeline, which carries Russian gas under the Baltic Sea directly to Germany, the most large mainland market.
The news has raised hopes that flows will increase rapidly, allowing European utilities to fill their storage capacity ahead of the winter heating season.
UK natural gas prices have tripled this year due to falling supplies from Russia and a contraction in demand from power plants as production from renewables (especially wind turbines) fell due to periods of high atmospheric pressure in Europe. They rose another 1.7% on Friday morning as short-term supply issues outweighed the prospect of relief in a few months.
5. Oil gains ground as Gulf production problems persist
Crude oil prices rose another $ 1 per barrel due to problems restoring production in the Gulf of Mexico after the persistence of Hurricane Ida.
Royal Dutch Shell (LON: RDSa), the largest offshore operator in the region, force majeure declared on some of its contracts Thursday, in a move that suggested it expects the West Delta-143 shallow water platform, which serves as a hub for various production pipelines, to remain affected for a time.
US officials estimate that just under 80% of Gulf production remains offline, more than a week after Ida’s strike. This means that Ida has already taken more barrels from the market this month than OPEC and its allies have added.
As of 6:30 a.m. ET, U.S. crude futures were up 1.7% to $ 69.27 a barrel, while Brent futures were up 1.7% to 72, $ 63 per barrel. Baker Hugues number of platforms and CFTCs net speculative positioning data is due later.
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