Global markets rise on first trading day of new year
03 Jan 2013
Global markets have perked on the first trading day of the new year, relieved from the US averting the fiscal cliff, which pushed the FTSE 100 above 6,000 for the first time since July 2011.
Following weeks of worry, a compromise bill was finally passed by the US Senate and House of Representatives to water down the combined tax hikes and spending cuts, which were to come into effect this month. The bill has averted the prospect of the world's biggest economy slipping back into recession.
Asian markets outperformed the rest with Hong Kong rising 2.9 per cent to its highest level since June 2011.
In London, the FTSE 100 was 129.5 points up at close, or 2.2 per cent at 6027.37. Banking shares were among the biggest gainers from the US agreement, with Barclays 5 per cent up and Lloyds Banking Group up 4 per cent. Mining shares too surged on the growing optimism about the prospects for the global economy, with the sector accounting for eight of the 10 risers in the leading index.
Positive reaction has also been seen among US investors with the agreement, even as there were worries that deal could see the country's credit rating lowered. The Dow Jones Industrial Average opened up 224 points, or 1.7 per cent, higher at 13,326.
Reuters quoted Johan Jooste, chief market strategist, Merrill Lynch Wealth Management EMEA, as saying in a note that investors in Europe would be satisfied with the deal for now, but a sustained break above previous years' highs required a positive outcome of the fiscal and budget negotiations that would continue through to March
