Daily Market Update – January 02, 2013

Top News Highlights

The U.S. House passed a bill undoing income tax increases for more than 99% of households, giving a victory to President Barack Obama even as Republicans vowed to fight him in coming weeks for spending cuts in exchange for raising the debt ceiling. The 257-167 vote capped a tension-filled day as Republicans balked at a bipartisan Senate measure. House Speaker John Boehner ordered a vote even though 151 of 236 Republicans, including Majority Leader Eric Cantor, ultimately voted no. Obama said he'd sign the bill into law. "The deficit needs to be reduced in a way that's balanced," Obama said. He said he wants top earners and corporations to pay even more and that Congress must raise the debt ceiling. "Everyone pays their fair share. Everyone does their part," he said

Economic Highlights

Manufacturing in the U.S. probably expanded in Dec, showing the industry is stabilizing after reaching a three-year low, economists said. The Institute for Supply Management's factory index rose to 50.4 from Nov's 49.5, which was the lowest since Jul 2009, according to the forecast of economists surveyed by Bloomberg
The UK economy will face a "groundhog year" in 2013, the Institute for Public Policy Research (IPPR) has warned in a report. Export growth has tailed off badly because Europe, the UK's main market, is back in recession. The government is cutting its spending on goods and services and businesses are reluctant to spend, the think tank said in the report
A gauge of China's manufacturing showed a third month of expansion, adding evidence that the recovery in the economy will extend into the new year. The Purchasing Managers' Index was 50.6 in Dec, the National Bureau of Statistics and China Federation of Logistics and Purchasing said. That compares with the 51.0 estimate in a Bloomberg survey of analysts and 50.6 in Nov