Markets were also affected by the Fed’s announcement that it will implement further monetary policies whilst interest rates will be held close to zero as long as inflation does not rise above 2.5%.
The UK’s FTSE added 21 points (+0.4%) to settle at 5946 whilst Germany’s DAX gained 25 points (+0.3%) to settle at 7615. France’s CAC traded flat to settle at 3647.
In the US, equity markets fell sharply after Federal Chairman Bernanke said that the Fed does not have all the tools necessary to staunch the effects of the fiscal cliff. The Dow Jones and the S&P ended flat, settling at 13426 and 1428 respectively whilst the Nasdaq lost nine points (-0.3%) to settle at 3014.
In the commodity space, crude oil for January delivery increased $0.98 (+1.1%) to settle at $86.77 a barrel after the International Energy Agency announced higher demand forecasts.
Gold for February delivery increased 0.5% to settle at $1717.90 an ounce after the Fed announced that it will purchase $45 billion of treasuries per month to take effect on January.
In the currency space, the Japanese yen fell to an eight-month low versus the US dollar after it was shown that the opposition, who is in favor of more aggressive monetary policies, is leading in the polls.
The euro traded higher against the euro for the same reasons European equity markets finished higher. The US dollar fell against most of its counterparts for the same reasons bullion advanced. Today will see the release of the MI inflation expectations (11:00am, AEDT) and the new motor vehicle sales data (11:30am, AEDT).