Fiscal Cliff Impasse Sees Stocks Down

The end of the trading week saw stocks fall as an impasse was reached on the Fiscal Cliff in the US. Republicans in the House of Representatives late Thursday canceled plans to vote on fiscal proposals drafted by Speaker Boehner. These called for tax hikes on incomes over $1 million, way above a White House proposal calling for tax hikes on incomes over $400,000.

However, critics have said the bill didn’t do enough to address spending cuts and as a result stocks fell on the fiscal uncertainty, dominating the markets who shrugged off positive economic data from the US which included:

Core durable goods orders, which exclude transportation items, increased 1.6% in November, beating market expectations for a 0.2% decline though down slightly from a 1.9% increase the previous month. Also rising was durable goods orders, which increased by 0.7% last month, beating consensus forecasts for a 0.2% increase, although down from a 1.1% increase in October. Finally, a separate Commerce Department report revealed that personal spending in the U.S. increased in November, outpacing expectations for a 0.3% increase and well beating the 0.1% drop recorded in the previous month.

Stocks
European markets saw the EUROSTOXX 50 fall 0.27%, the FTSE 100 lost 0.31%, France’s CAC 40 drop 0.15%, whilst Germany’s DAX 30 finished down 0.47%. In the US, the Dow Jones Industrial Average finished down 0.91%, the S&P 500 index was down 0.94%, whilst the Nasdaq Composite indexclosed 0.96% lower.

Currencies
In a strong day of volatility for binary traders, the USD recouped most of its losses made earlier in the week to rise up against most major currencies on Friday. The euro fell 0.41% against the greenback , who also enjoyed healthy increases against the GBP – up 0.68%, the CHF – up 0.48% and up 0.77% against the commodity linked AUD.

Weekly Outlook
Despite holiday season being upon us, there is enough economic data releases and enough economic events (Fiscal Cliff) to keep the markets busy. As we saw on Friday, there is still plenty of volatility in teh markets to create plenty of profit opportunities