Markets are still being held hostage in the fiscal cliff negotiations in Washington, as many traders have decided to just sit out until something is hammered out. With the deadline looming, there's a good chance we will see the politicians "kick the can down the road" again, setting up another fiscal cliff crises in the new year.
Overnight, China manufacturing was reported to have gained more than expected, boosting the Shanghai market index. The Nikkei in Japan was up as well in reaction to accelerated quantitative easing ordered by new Prime Minister Abe. Euro stocks were mixed, with Italian and Spanish markets down.
Wall St. dropped at the opening bell, but quickly rebounded as rumors from Washington on progress in fiscal cliff talks were released. The dollar index, which had been higher overnight, dropped suddenly into negative territory this morning.
Gold and silver, which had climbed in overnight trading, took a moderate hit in London trading around 7am Eastern time, but have recovered. In the absence of inflationary news, precious metals may tend to act more like a commodity than a safe haven in the short term, until the markets have a better idea of the possibility of a near-term recession due to austerity measures brought on by the fiscal cliff.