Eagle Eye Opener: Obama Wins; Fiscal Cliff Looms

Eagle Eye Opener

Obama Again: European Markets Shrug Their Shoulders (Reuters)

With Obama’s second term now assured after yesterday’s election, world markets kept on keepin’ on, virtually shrugging their shoulders at the results. Gold and global shares gained slightly, while the dollar fell marginally. European markets, which may move higher later in the week, began their trading sessions with a yawn as London’s FTSE 100 (FTSE), Frankfurt’s DAX (GDAXI) and Paris’s CAC-40 (FHCI) opened between 0.2% and 0.6% higher. Europe turns its attention back to Greece today, where another round of austerity voting takes center stage.

 

Asian Markets Breathe Sigh of Relief… Temporarily (CNBC.com)

Investors in Asian markets took the news of an Obama victory a little more to heart than their European counterparts, with markets initially rising. However, analysts who claimed that response to be a short-lived honeymoon ended up being right as Japan and China both closed fractionally lower: at 8,972.89 and 2,105.73, respectively. Conversely, Hong Kong’s Hang Seng ended up 0.7% to 22,099.85, South Korea’s Kospi rose 0.5% to 1,937.55. Uncertainty in Asian markets will continue to linger as the United States closes in on the January 2013 fiscal cliff and the future of China’s leadership remains cloudy.

 

With Election Over, Fiscal Cliff Looms (Reuters)

With the conclusion of the U.S. presidential election — which spent $1 billion to promote the candidates as the most costly election in U.S. history — American voters and investors can turn their attention to the financial monster on the horizon: the “fiscal cliff.” The fiscal cliff refers to $600 billion in tax increases and spending cuts set to automatically kick in January 1, 2013. The fiscal cliff has the potential to end the fledgling economic recovery in the United States and cause a new recession. If the Obama administration cannot do anything to soften this blow, global investors would be even less confident about loaning the U.S. government money, the deficit will widen further and the dollar will sink even lower. In the end, the United States could see its credit rating slashed again — a move that initiated another U.S. market tumble in 2011. President Obama has seven weeks and counting to allay the fears of investors and find a solution for the looming fiscal cliff.

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U.S. stocks and commodities rallied for a second day, while the U.S. dollar and Treasuries fell as investors awaited presidential election results.

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