Spreadex Market Update

Market to end week where it began



The market is to end the week as it did begin; by worrying about the fiscal cliff and whether or not the world’s biggest economy will fall off it.

U.S. equities this week have continued to cheapen at the same rate that bond prices have risen, with investors searching for clarity over the distribution of possible outcomes. They haven’t found any.

European equities have, unsurprisingly, caught the same cold, not helped by evidence from the eurozone that output and manufacturing is stalling. The euro and the Xetra Dax have traded in sympathy with manifesting headline risks, falling to levels not seen for months.

The outlook for next week looks only as good for bulls as stocks’ ability not to cheapen further. Indeed, if room can be found to the downside then traders will punish the market by offering no liquidity during the point at which it appears most compelling to sell, allowing prices to collapse if sentiment can so accommodate.

Investors are likely aware of this and are already nervously preparing to raise cash should the market panic.

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