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German Market Rallies On Fiscal Cliff Deal

The German market is rallying on Wednesday, after the U.S. Senate on Tuesday approved the "fiscal cliff" bill that seeks to avoid tax increases that took effect on the first of January.

With a majority of 89-8, the U.S. Senate approved the "fiscal cliff" legislation, making permanent the tax reductions for most households and delayed the automatic spending cuts for two months. These tax reductions were granted in 2001 and 2003 during George Bush's presidency.

However, the Obama administration missed the December 31 fiscal deadline, failing to avert $600 billion of tax hikes and spending reductions. The middle class will have permanent low tax rates, while the rate would rise to a maximum of 39.6 percent for the wealthy.

The Euro Stoxx 50 index of eurozone bluechip stocks is gaining 2.1 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, is rising 1.2 percent.

The DAX index is gaining around 2 percent in the first trading day of the new year.

Commerzbank is gaining 4.5 percent and Deutsche Bank is adding 3.3 percent.

ThyssenKrupp and HeidelbergCement are advancing 3.9 percent and 3.8 percent, respectively.

Volkswagen, BMW and Daimler are rising between 3.7 percent and 2.3 percent.

Elsewhere in Europe, the French CAC 40 is adding 1.9 percent and the UK's FTSE 100 is gaining 1.8 percent. Switzerland's SMI is closed today.

Across Asia/Pacific, Australia's All Ordinaries climbed 1.3 percent and Hong Kong's Hang Seng surged 2.9 percent. The Chinese and Japanese markets were closed.

In the U.S., futures point to a higher open. The markets were closed on Tuesday on account of the New Year.

In the commodity space, crude for February delivery is adding $0.83 to $92.65 per barrel and February gold is gaining $7.2 to $1683.0 a troy ounce.

by RTT Staff Writer

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