Posted November 13, 2012 by Karen Kinsey in World

Temper Markets Fear of Financial Cliff

The stock market of Toronto ended higher following 2 days of losses amidst concerns about the unplanned effects from the United States economy experiencing the so-called financial cliff.

The composite index of S&P/TSX rose to 12,196.80, by almost 5.75 points, while the TSX Venture Exchange climbed to 1,300.92 by 2.24 points.

The financial cliff tag refers to a series of tax hikes and spending cuts targeted at slashing the shortage, which are all set to go into effect at the beginning of the year.

If they are permitted to take full effect, the tax hikes and cuts will sum up to around half a trillion dollars and will also take a big part of GDP in the year 2013.

Failing to come up with a negotiation would probably tip back the United States into recession and pull down other economies as well.

Sun Life Global Investment’s chief investment officer, Sadiq Adatia said that all emphasis and focus of the world is on the fiscal cliff. The way in which United States handles this issue will decide how things will move further. Further, he told that there will not be any new funds going in the market till traders find some kind of resolution there.

Mark Carney, the governor of Bank of Canada said that the financial cliff is the most looming threat in front of the Canadian economy.

Traders were comforted to a very little extent from an announcement in the early afternoon by Barack Obama that he is welcoming business and congressional leaders to a conference next week for discussions targeted at hitting upon a compromise.

However, he made it obvious that spending cuts had to be mixed with new revenue, adding that he would not agree to any unbalanced approach and does not incorporate the prosperous paying higher taxes.

Republicans state that increasing tax rates on the prosperous Americans is an unviable proposition.

The Canadian dollar dropped to US99.87¢.

The loonie has declined around 9/10th of a cent in the past 2 sessions as concerns about the financial cliff thrust the investors to the US Treasuries safe haven.

The indexes of New York were a bit changed after recording their worst falls of the year in the previous 2 sessions as the investors are concerned that taxes on dividends and capital gains could increase considerably after the beginning of the year.

Karen Kinsey

Karen Kinsey with a degree in journalism. She ended up going into the education field and has been a teacher for the past six years. Karen Kinsey is a television producer, writer, editor, professor, wife, mother, sister, daughter, friend and longtime, diehard Phillies fan. Karen Kinsey writings have been featured in such mainstream media as The Guardian, USA Today, Global Times, China Daily, Beijing Review, among others.