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World markets advanced Wednesday as lawmakers in the United States completed legislation that will mute much but not the entire fiscal cliff, CNN informs.
Asian and European stocks post strong gains, while government bonds in weaker eurozone economies rally as investor appetite for riskier assets rise on the diminished threat of an immediate hit to growth in the world’s largest economy.
The Senate passed a compromise measure late Tuesday that would extend Bush-era tax cuts for the vast majority of Americans and spare tens of millions from the Alternative Minimum Tax.
But the fiscal cliff deal, crafted over the holiday by Vice President Joe Biden and Senate Minority Leader Mitch McConnell, left a range of big issues unresolved and some analysts say the positive market reaction could dissipate quickly.
“Today’s bullish tone may continue as we head toward the weekend but the euphoria will most certainly evaporate as the deal voted through does not include raising the debt ceiling and longer term budget cuts,” said Joe Rundle, head of trading at ETX Capital in London.
All major global markets were closed Tuesday for the New Year’s holiday, so indices in Asia and Australia provided the first clues about investor sentiment.