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Wednesday, November 07, 2012 - Morning Market Update
Max Cohen
Max Cohen 100x 100 Trader Comment

Barack Obama re-elected

President Barack Obama has been re-elected as the leader of the U.S. and he will quickly need to address a fiscal cliff of more than $600 billion in tax increases and spending cuts that take effect in 2013 unless Congress can reach a budget compromise.

Monetary policy will remain loose under Obama so the dollar may see some significant selling, however as the fiscal cliff approaches this may slow. 

After Wall Street backed  Mitt Romney, they are now faced with even tougher regulations and building strong ties with the new financial regulator that Obama will appoint will be crucial.

Obama lost the support of many bankers in the aftermath of the 2008 financial crisis and the passage of the 2010 Dodd-Frank financial reform law, which sought to shore up the financial system but also cost banks billions of dollars in annual profit.

It is highly likely that Obama’s re-election will lead to more accountability and tighter regulations on Wall Street.

London’s financial sector will lay of 13,000 staff in 2013, cutting employment in a key UK economic sector to a 20-year low.

Studies have also shown that job vacancies in Europe and Asia are also dropping. Financial firms in Europe’s biggest financial centre have laid off more than 100,000 employees since a market peak in 2007.

The financial sector accounts for just over 10 percent of the UK economy and is seen by most analysts as a key driver of the long-running economic boom that ended with the 2008 crisis.

It is likely that the Bank of England will announce on Thursday that they plan on pausing bond purchases aimed at boosting the economy, some rate-setters have however voiced doubts about the policy’s bite. The central bank has bought a total of 375 billion pounds worth of British government bonds since the 2007-08 financial crisis, completing the latest round of purchases last week.

Economists have been paring back expectations of more buying, or quantitative easing, in November since data showed late last month surprisingly strong GDP growth between July and September.

The Trading Day and Week Ahead

For further information on the trading day ahead, take a look at our Financial Diary, which previews all the Economic Data due out to today and projected or previous figures.

Our Financial Diary is updated in real time as the figures are released throughout the day.

If you are unsure what different Economic Figures mean take a look at our Economic Indicators Explained guide.

For a look at the trading week ahead our Financial Diary also lists all the companies due to submit trading updates this week. Each Friday, our diary will preview the forthcoming week's economic indicators and company reports schedule.

For market trends and analysis, don't forget our charts have automatically generated support and resistance trend lines helping aid your financial spread betting with technical analysis. For more help on using our charts, view our Guide to Trading with Charts?


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