“Fiscal Cliff” Drama Pushes Markets Down

The market has turned into a pessimistic mood as the fiscal cliff deadline approaches, yet President Obama and House Speaker Boehner were unable to negotiate a deal that will avoid the steep year-end tax hikes and spending cuts. Politicians on Capitol Hill also grew increasingly skeptical.

The delay on the expected deal is bringing extra stress and high volatility on the markets before the year-end holidays. In the Asian market, Nikkei lost -0.99% and slipped under 10,000.00 while Hang Seng and Shanghai composite indexes dropped by 0.82% and 0.69% respectively.

Meanwhile, The European futures and commodities followed the downside move while the volatility index, VIX, added 1.79%. Gold is now trading at 1,644.50, at its lowest levels since mid-August.

In currencies, for the 24 hours to 23:00 GMT on Friday, EUR declined 0.38% against the USD and closed at 1.3188, as investor risk appetite continued to decrease a day after the Republican “Plan B” effort to avoid the fiscal cliff resulted in a failure.

President Obama is ending his Hawaiian vacation Wednesday to return to DC and address the unfinished fiscal cliff negotiations.