The Asian regional index MSCI Asia Pacific was roughly constant but rebounded from losses after the Bank of Japan raised its asset purchase program from 66 trillion to 76 trillion yen. The increase - of 10 trillion - is coupled with the similar budget stimulus in preparation and between the two they amount to about 4% of Japan's GDP. The Japanese stock market saw a rare divergence, with the Nikkei falling and the Topix (which is actually more representative) rising.
In this part of the year the markets are shaken by the ups and downs on the 'fiscal cliff'. Yesterday the pendulum swung towards pessimism, but agreement is inevitable, and Obama has the upper hand. Republicans know that inaction would lead to big tax hikes, as the tax rate cuts enacted under Bush roll back, and opinion polls confirm that a majority of Americans would hold Republicans accountable for the deal failure.
The euro remains above 1.32, gold is well below 1700 and oil is advancing at $89/barrel.
