Good news still hurting the US

Good news still hurting the US, threat of tapering is hanging over markets

By Chay Flack (Equities Dealer, CMC Markets Stockbroking)

The Dow Jones fell 129.6 points (0.81%) to 15843 overnight as a congressional budget deal signalled an improvement in the economy and fuelled speculation that the Federal Reserve will reduce the stimulus at its December 17-18 meeting. Congressional negotiators won Republican endorsements for the plan to ease automatic U.S. spending cuts for two years, remove the risk of a government shutdown and cut the deficit by US$23 billion.

The Volcker rule was issued by five US agencies overnight as part of the Dodd-Frank Act’s regulatory overhaul. The rule bars US banks from speculating with their own money and has been largely anticipated as banks have closed or spun off their proprietary trading desks. It did fall short of its full potential however as market making operations have been left unchanged.

The Australian market is experiencing negative sentiment in the wake of Holden’s exit and the impact it will have on jobs. Unemployment numbers will be released for November today, however the vacuum created by Holden will be felt for months and its impact won’t be seen in economic numbers until January.

Our futures are pointing down 26 points and with light volumes this week I expect the market to finish in the red today.

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