Trading Volume Up 46%, After Fiscal Cliff Averted
Traders Magazine Online News, January 2, 2013
The number of shares changing hands in Stoxx Europe 600 Index companies Wednesday morning was 46 percent higher than the 30-day average, according to data compiled by Bloomberg.
European stocks rallied to a 19-month high as U.S. lawmakers passed a budget bill that avoided most scheduled tax increases threatening a recovery in the world’s largest economy. Asian shares and U.S. index futures also advanced.
The Stoxx Europe 600 Index jumped 1.9 percent to 284.95 at 11:53 a.m. in London, the highest level since May 11, 2011.
The MSCI Asia Pacific Excluding Japan Index gained 2.1 percent as equity markets in Japan and mainland China were closed for public holidays. Futures on the Standard & Poor’s 500 Index expiring in March added 1.5 percent.
“It’s good to get the U.S. budget deal resolved and to get the details, as it’s been dragging on for a while,” said Andrea Williams, head of European equities at Royal London Asset Management, which oversees about $1.1 billion. “Politics were a real ball last year; this year started well.”
European stocks posted the biggest annual rally in three years in 2012 as the European Central Bank’s program to purchase bonds of the region’s weakest economies helped ease concern the euro area will fracture.
The Stoxx 600 rose 14 percent in 2012, the biggest increase since the 28 percent jump recorded in 2009.
By comparison, the Dow Jones Industrial Average rose from 12,938.19 at the start of the year to 13,104.14 at its close. That is a gain of 1.3 percent.
The Standard & Poor’s 500 Index rose from 1,402.43 to 1,426.19, a gain of 1.7%.
The Nasdaq 100 rose 16.8%, from 2,277.83, to 2,660.93.
The U.S. House of Representatives passed the budget legislation just after 11 p.m. in Washington yesterday, breaking a yearlong impasse over how to head off more than $600 billion in tax increases and spending cuts set to start taking effect yesterday.
President Barack Obama said he will sign the bill after the 257-167 vote. The Senate approved the proposals 89-8 in the first hours of Jan. 1.
The bill will delay by two months automatic spending cuts scheduled to start this month as Republican lawmakers abandoned their effort to add further reductions to the deal. It reinstates tax cuts that expired Dec. 31 on taxable income of individuals up to $400,000 and of married couples of up to $450,000, leaving top earners with a marginal tax rate of 39.6 percent, up from 35 percent last year.
The largest economic impact of the accord will come from ending a two-percentage-point payroll-tax cut, a move that will shrink paychecks for U.S. workers even as most income-tax reductions that expired Dec. 31 are extended permanently.
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