Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Republican non-vote throws spanner in the works

Friday 21 December 2012

Republican non-vote throws spanner in the works.

By Tim Waterer (Senior Trader, CMC Markets)

Trading had been going along swimmingly during Asian markets hours until news of the Republican –non vote threw a spanner in the works, which saw risk assets quickly reverse course. But even if Republicans agreed to this plan, the Democrats had already flagged that they wouldn’t, so the net effect on the eventual cliff outcome is debatable. What is not debatable is the immediate deflating affect on financial markets courtesy of this latest news.

There are many moving parts to the ongoing fiscal cliff discussions which makes it difficult for investors to project whether financial markets will be adopting a pro-risk or anti-risk sentiment at the commencement of 2013. The lively move higher by financial markets in recent weeks when compared to the snail-paced discussion progress would indicate that a heavy dose of holiday season optimism has been indeed permeating the market. The only problem with this is that it leaves the door open for a significant fall should a non-market appeasing outcome occur in Washington.

The Aussie Dollar was on the slide today when news of the Republican non-vote on tax plan B hit the wires. The AUDUSD was already sitting below 1.05 due to another steep fall in the gold price which impacted the commodity-linked AUD. The Aussie slipped around a third of a cent (from 1.0470 to 1.0440) as higher yielding currencies gave up ground to the safe haven US Dollar with the latest set-back on the ‘cliff’ talks. How US markets take this latest news tonight will impact whether the AUD is closer to 1.04 or 1.05 heading to the weekend.

Despite an up-beat start to the day, the Australian sharemarket performed a u-turn following with the news out of Washington with sentiment dampened. The slump in US futures was a trend following by the major Asian bourses, with traders unwinding long positions as fiscal cliff fears were ramped up. With an apparent obstacle coming this close to the deadline, investor anxiety naturally heightened today and this was reflective in the performance of the ASX200. The rosier looking morning sentiment had taken a more solemn tone by the afternoon, with traders pulling in the reins on a market advance given the stagnated US budget talks.
ends

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Gordon Campbell: On Tiwai Point (And Saying “No” In Greece)

Its hard to see how Rio Tinto’s one month delay in announcing its intentions about the Tiwai Point aluminium smelter is a good sign for (a) the jobs of the workers affected or (b) for the New Zealand taxpayer. More>>

ALSO:


Half Empty: Dairy Product Prices Extend Slide To Six-Year Low

Dairy product prices continued their slide, paced by whole milk power, in the latest GlobalDairyTrade auction, weakening to the lowest level in six years. More>>

ALSO:

Copper Broadband: Regulator Set To Keep Chorus Pricing Largely Unchanged

The Commerce Commission looks likely to settle on a price close to its original decision on what telecommunications network operator Chorus can charge its customers, though it probably won’t backdate any update. More>>

ALSO:

Lower Levy For Safer Cars: ACC Backtracks On Safety Assessments

Dog and Lemon: “The ACC has based the entire levy system on a set of badly flawed data from Monash University. This Monash data is riddled with errors and false assumptions; that’s the real reason for the multiple mistakes in setting ACC levies.” More>>

ALSO:

Fast Track: TPP Negotiations Set To Accelerate, Groser Says

Negotiations for the Trans-Pacific Partnership will accelerate in July, with New Zealand officials working to stitch up a deal by the month's end, according to Trade Minister Tim Groser. More>>

ALSO:

Floods: Initial Assessment Of Economic Impact

Authorities around the region have compiled an initial impact assessment for the Ministry of Civil Defence, putting the estimated cost of flood recovery at around $120 million... this early estimate includes social, built, and economic costs to business, but doesn’t include costs to the rural sector. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news