Global Markets Higher As US Congress Averts Fiscal Cliff

Posted January 2nd, 2013 at 6:00 am (UTC-5)
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World markets are opening 2013 on a high note, after the U.S. Congress reached a deal to end the so-called “fiscal cliff” crisis that threatened to send the world's largest economy into recession.

Asian stock markets welcomed the development in the first trading of the new year, with Hong Kong jumping 2.9 percent, Sydney gaining 1.2 percent, and Seoul adding 1.7 percent. Markets in Japan and China were closed for public holidays.

Early trading also surged in Europe. Britain's FTSE 100 rose 1.8 percent, while Germany's DAX 30 and Paris' CAC 40 indexes both jumped 1.9 percent in morning deals.

Late Tuesday, the House of Representatives cleared a deal to avoid $500 billion in spending cuts and tax increases, endings weeks of quarreling that had overshadowed global markets. Observers say the deal will provide short-term certainty, but will not do much to address investor concerns about the future.

The bill did effectively solve the contentious issue of tax increases, raising rates on the wealthiest of Americans. But it delayed a tough decision on looming spending cuts by two months, and failed to resolve the issue of whether lawmakers will choose to raise the U.S. debt ceiling.

U.S. markets are respected to respond positively to the deal when they open Wednesday, after taking a day off for the New Year's holiday. U.S. stocks rose sharply on New Year's Eve as Congress move towards a deal.