15.01 AEDT, Thursday 15 November 2012
Investors flee as equities hit new lows
By Ben Taylor (Sales Trader, CMC Markets)
Markets are reflecting worse case scenarios today with investors fleeing in droves as equities hit seven week lows
following falls in European and US markets overnight.
Miners and Banks have taken the largest hits today as a myriad of events plague our market. Obama's speech failed to
calm the markets anxiety over the pending fiscal cliff, details emerged that Greece’s recession is deepening, and
tensions escalating in the Middle East all added to the panic selling.
Obama’s speech overnight is the key reason we are taking such a hit today. While the markets were hoping for the
Democrats and Republicans to stop playing hardball and find some middle ground the opposite seems to be happening. Obama
believes he has a mandate from the people to repeal the Bush tax cuts for high income earners, which the Republicans
strongly oppose. Increasing taxes for the rich has the two parties in a stalemate and is not something the market wanted
to hear.
News of Israeli airstrikes on the Gaza strip and a flash estimate that had Greece’s GDP contracting further ahead of new
austerity measures have done little to incite confidence at this time.
Today’s inflation expectation did provide a little ray of hope, with inflation sitting at the lower end of the band
providing the RBA with room to move. Given the increasing risk from a macro level the chances of a cut in December are
getting better.
ENDS