Joe Biden’s plans to lift stamp duty have sent US and European markets lower, while UK retail sales have lifted the pound. FirstGroup lead the way higher, with domestic travel likely to receive a summer boost.

  • Biden tax plans stifle sentiment.

  • UK retail sales lifted ahead of reopening.

  • Domestic travel stocks outperform airlines.

European markets are on the back foot in early trade, with valuations taking a dive in the wake of Joe Biden’s proposal to implement a near 50% stamp duty rate on high earners. With the past year having seen traders react with glee over repeated bouts of stimulus, traders are gradually seeing the uncomfortable truth that those debts have to be paid one way or another. Quite whether Biden manages to garner enough support to pass this bill remains to be seen, with the president likely to require almost unanimous support from the Democrats given the expected widespread rejection from the GOP.

UK retail sales have enjoyed a welcome boost in March, with the surge of 5.2% highlighting preparations for the gradual loosening of restrictions. With many having saved heavily over the course of the past year, clothing sales in particular gained traction as shoppers prepared for the improving weather. Undoubtably, the reopening of non-essential stores in April will ensure another fresh surge in spending this month, with the economic outlook in the UK improving with each passing month.

Domestic travel appears to be in favour for today, with gains across the likes of First Group and National Express standing in stark contrast to weakness across UK-listed airlines. Thus far, we are yet to see any post-reopening spike in Covid cases that could undermine the prospect of international travel resuming in mid-May. Markets are responding with optimism over First Group’s decision to focus their efforts on the UK, yet in truth much of that strategic shift was the result of pressure from investors. Nevertheless, with international travel expected to remain subdued by quarantine and testing requirements, there is no doubt that domestic travel will receive a significant boost as holidaymakers opt for a Great British Summer.

Ahead of the open we expect the Dow Jones to open 56 points higher, at 33,872.

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