Investing
FTSE rises sharply
The FTSE 100 surged this morning as investors celebrated the news that the fiscal cliff deal in the United States.
Mining and banking stocks in particular benefitted from the increase in risk appetite.
“It may have come at the last minute, but US lawmakers finally managed to find some common ground by voting through a package of policies designed to avoid the immediate fiscal cliff,” said Joe Rundle, head of trading at ETX Capital.
“Financial markets have responded accordingly with Asian shares performing strongly and European markets posting sharp gains in the first trading day of 2013 and US markets are likely to react in the same fashion.”
US President Barack Obama praised a last minute deal to avoid the fiscal cliff, speaking at a press conference shortly after the House of Representatives passed a Senate-backed bill to stop massive tax rises and spending cuts, by 257 votes to 167.
A day before it had cleared the Senate by a majority of 89 votes to 8. The fiscal cliff – scheduled tax rises of around $536bn and spending cuts of $109bn – was widely expected to throw the US economy back into recession if politicians couldn’t break months of impasse.
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But the fiscal headache is far from over as talks over spending cuts go on and the US Treasury announced the country has hit its borrowing limit again.