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Workers sweep the floor in front of the final stock price index after the ceremonial closing event of the 2012 stock market during a photo opportunity for the media at the Korea Exchange (KRX) in Seoul yesterday.
NEW YORK: Global stocks edged lower along with the euro yesterday as the White House and US lawmakers planned to make a late effort to avoid the US “fiscal cliff.”
Meanwhile, expectations that Japan will inject new stimulus into its economy pushed the yen to a two-year low for a third straight day.
President Barack Obama and Democratic and Republican lawmakers were scheduled to meet yesterday as the deadline looms for reaching a budget deal to avert massive tax increases and spending cuts that could drag the economy — and others around the world with it — into recession.
Participants in the 3pm session (2000 GMT) will attempt to smooth over sharp differences over raising taxes on higher-income Americans and spending cuts in politically sensitive social welfare programs such as Medicare and Medicaid.
The MSCI all-world share index was down 0.2 percent, and the pan-European FTSEurofirst 300 was down 0.4 percent.
US stocks were also lower. The Dow Jones industrial average was down 63.20 points, or 0.48 percent, at 13,033.11. The Standard & Poor’s 500 Index was down 6.26 points, or 0.44 percent, at 1,411.84. The Nasdaq Composite Index was down 7.42 points, or 0.25 percent, at 2,978.49.
Allowing $600bn of higher taxes and spending cuts to start in January would prevent US debt spilling beyond a $16.4 trillion agreed limit. However, analysts fear the measures could wipe as much as four percent off the country’s growth rate.
“The recent market movement is all about the lack of resolution and clarity on the cliff and comes despite the fact that most economic reports have been very favourable,” said Richard Weiss, a Mountain View, California-based senior money manager at American Century Investments. “We have to believe, once Congress comes to any resolution-whether it comes before the New Year or after-the market will resume its upward trend, as data indicates it should.”
Among Wall Street’s gains, Barnes & Noble Inc rose 8.2 percent to $15.55 after the company said Pearson had agreed to make a strategic investment in its Nook Media subsidiary. However, it said the Nook business will not meet the bookseller’s prior projection for fiscal year 2013. The euro was down 0.2 percent on the day at $1.3210, having slipped to a session low of $1.3164 when traders said it broke below stop-loss sell orders around $1.3170.
An agreement on the US budget would be viewed as positive for riskier currencies such as the euro and Australian dollar, while a deadlock or snags in the negotiations would be deemed positive for the safe-haven and highly liquid dollar.
The yen’s unabated slide since Shinzo Abe took the helm as Japan’s prime minister on Wednesday has taken the currency to two-year lows for three straight days. Abe has vowed to press for aggressive monetary stimulus to fight deflation.
The dollar was steady against the yen at 86.07 yen, edging away from an earlier peak of 86.64 yen, its strongest since August 2010, when it stopped just shy of reported options barriers at 86.75 yen and 87.00 yen.
Brent crude oil held below $111 per barrel, not far off its highest this month. Brent crude was down 18 cents to $110.62, on course for a weekly gain of about 1.5 percent and a full-year increase of about 3 percent, which would be the smallest in four years.
US crude rose 17 cents to $91.04 and was set for its first yearly loss in four years.