Markets appeared Monday to be taking in stride the prospect that U.S. politicians will fail to agree a budget deal in time to avoid automatic tax increases and spending cuts that many economists think could tilt the world's largest economy back into recession.
With just hours to go before the U.S. falls off the so-called "fiscal cliff," Republicans and Democrats remained divided over tax and spend, raising the prospect that markets will start 2013 without a clear idea of America's budget policy. The main sticking point appears to be what level of taxes are imposed on higher incomes.
Discussions in the Senate broke off Sunday night without an agreement. The Senators will return to their offices Monday to try and hammer out a deal before the deadline.
"With the gulf between both parties still wide and the desire to protect their supporters' key interests so ingrained, it is difficult to see how both sides can compromise enough to agree a deal at this point," said Rebecca O'Keeffe, head of investment at Interactive Investor.
However, it's not the first time that budget discussions in the U.S. have gone down to the wire, and investors remain confident that some sort of deal will be reached, if not Monday then in the coming days or weeks. As a result, they think that the potential damage wrought by higher taxes and spending cuts will be limited.
In addition, a backup proposal that would address only a few issues is expected to be presented by Senate Majority Leader Harry Reid, a Democrat, if a bipartisan deal is not reached.
The prospect of counter-measures to offset the "fiscal cliff" impact helps explain why markets were fairly calm in Europe and Asia, and Wall Street was poised to open higher.
Read more Business News
- Mad about gas? You're to blameCentral Okanagan
- Warriors bury Express in openerBCHL
- School zones back inKelowna
- Teen's killer files appealVernon / N. Okanagan
|QHR Technologies Inc||1.37||+0.05|
|Anavex Life Sciences||0.223||-0.0031|
|Copper Mountain Mining||2.66||-0.02|
|Sunrise Resources Ltd||0.02||-0.005|
|Mission Ready Services||0.29||-0.01|
Last night I was privileged to be able to speak at the Greater Westside Board of Trade business awards dinner. Photo: ContributedI talked about Innovation and Collaboration which are two very interes...
There will be a time when you will need to decide who you should appoint as executor of your Will. As well, there may be a time when you will be asked by someone to act as the executor of his or her W...
Part 1 of 2 Photo: Thinkstock.com1. Move in with your parents or in-laws Explain that you're thinking strategically in moving back home. The quickest way to get into the housing market is to ma...