US equities opened significantly higher after congress passed the fiscal cliff bill in the early hours of Tuesday morning, echoing their European counterparts with all major indices closing the session up over 2%. The risk-on move has seen T-notes tumble following the news although some analysts are speculating that because the deal delayed resolving the spending cut issue, the US are just ‘kicking the can down the road’ and a deal still needs to be worked upon during the next two months. Earlier market chatter also suggested a downgrade for the US by one of the three major rating agencies could be on the cards although there have been no comments from Fitch, S&P or Moody’s following the deal. WTI crude futures are also trading over USD 1.00 higher although have handed back some of the gains after earlier trading higher by over USD 2.00.
In terms of data releases, US ISM Manufacturing made a small beat on expectations at 50.7 vs. Exp. 50.5 with the employment sub-index printing at 52.7; the highest level since September. This may be in focus with the US Non-Farm Payroll release on Friday.
Looking ahead, the session remains light on speakers and macro-economic data releases with volumes expected to be thin as participants digest the fiscal cliff deal.
Print 18:20, 02 Jan 2013 - Market Analysis - Source: RANsquawk
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