US Stocks End Slightly Up On Thursday

• This has sent Asian stock markets lower this morning and futures are pointing to a negative opening for the stock markets in both Europe and the US today.

• JPY and USD have strengthened on intensified worries about the fiscal cliff.

Despite US stock markets ending higher in yesterday’s trade, the negative sentiment has returned overnight and this morning Asian stock markets are broadly trading slightly lower. The reason is renewed worries that a deal on the fiscal cliff in the US will not be struck.

The reason for the increased worries is that Republican House Speaker John Boehner’s plan for a compromise on the fiscal cliff got into trouble after he faced rebellion within his own party. That led Boehner to postpone a vote on his so-called Plan B until after Christmas, raising fears that he will not be able to find support for a compromise.

The increased worries over the fiscal cliff have led to a spike in risk aversion overnight and the reaction in the markets has been as should be expected – stock markets are trading lower this morning, JPY and USD are strengthening and US bond yields are lower. Finally, futures point to US and European stock markets coming under pressure today. That said, the market reaction does not indicate any form of panic. So far losses in the Asian stock markets are moderate – with the major indices in the region dropping less than 1%.

It should be noted that Boehner failing to get support for his "Plan B" does not really change anything, as it has been unlikely all along that the Democratic majority in the US Senate would have supported his plan.

With "Plan B" now effectively dead it seems impossible for Boehner to ensure any support in the House for a deal on how to avoid the fiscal cliff before Christmas, which obviously is a concern to market participants.

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